I’ve got a couple of savings accounts that are approaching that 250k Mark and I don’t want to exceed that and go past the FDIC insurance limit. I have a limited appetite for risk so a big investment is out of the picture (I also don’t want to buy a house). I’m currently only getting about 1% interest. I have zero debt and am not interested in a 401(k). All I’m looking for is a way to “make my money work for me” a bit more and not lose value due to inflation. I don’t want to absorb too much risk or potentially lose much principal. What are some financially savvy options here? Is a high yield (2-3% APR) savings account any better? Are there other options someone could suggest?
Generally if you're keeping a lot of money in cash you'll have low variability in your returns but also low expected performance that might not even keep up with inflation and taxes. I'd suggest you look for a good intro to investing basics that discusses risk and asset allocation. If you're very risk averse you might consider investing in bonds and possibly a bond index fund. Check out video 3 at https://www.bogleheads.org/wiki/Video:Bogleheads®_investment_philosophy#Develop_a_workable_Plan_.28Rule_.231.29 and other resources on that site.
Vanguard money market mutual fund gets 2.5% now. Technically it’s not risk free, but you can look up the history of money market funds failing. It’s happened like twice and the loss was only a few percent. It’s basically risk free. If you are investing long term though, your bigger risk is missing out on higher returns. There had never been a 30 year period where stocks did not beat money market accounts.
Get that money into investments. You are losing almost 3% per year via inflation your 1% return isn’t even covering that. You are losing almost 5k/year per account by holding it in cash.
Create online savings account at CapitalOne, Marcus, Ally each offering ~ 2% for savings and higher for CDs. Put ~100k in each account to minimize any risk.
I believe they are each insured for 250k
Yeah I know. I imagine there’ll be some hassle in claiming money from FDIC in case bank defaults. Hence good to spread the investment across banks. OP seems overly conservative and so this’ll eliminate risks.
Ally offers 2.2% in savings account Discover is at 2.1% Or move some to CD ladder at 2.6%
Ally.com for 2.25% interest in US. If you don't need the cash in near future, diversify and put 125K in savings such as Ally and 125K in some sort of dividend stocks and bonds.
Yeah, get it out of cash and invest at least a decent percentage of it. If you’re a “cash is king” person and want to keep it in that position, open another account somewhere else and start depositing into it to avoid going over the FDIC insured limit at that bank.
Amex savings accounts are 2-3% and FDIC insured.
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A CD ladder is one conservative savings approach.
This, beat me to it.