Basically a scam banks use to convince the financially illiterate to give them access to more money than they deserve. Savings account means nothing, except that your money is slowly losing value by the day. You can immediately tell if someone is financially savvy or not based on this. Or if they brag about how much they have in their bank. Idiots = I put a little in the 401k, and most in 'savings', because I was taught that in school and it has the word 'save' in it. Savvy = keep a couple months money in checking for liquidity purposes, invest the rest. I keep less than 5% net worth in the bank at any time.


Also, bonds should only be in your portfolio if you are 60+ ready to retire or are retired. Anything else should be completely equity or things like real estate.





Discuss

Most people are financially retarded

I agree with your last point on bonds. I even think that the Target Retirement Date funds that most people allocate their 401k into are suffocating returns for that reason (since these funds are ~10% bonds; to your point, I would rather put money in 100% equities such as a large-cap index fund)

Jakes on OP, most people live pay check to pay check and don't keep anything in savings.

I dunno man if you don't have enough to invest in property (let's say 50k) then it can be a good idea.

the 'rule of thumb' taught is : 100 - your age = percentage of portfolio that should stocks. Basically have more equity when younger and slowly transition to bonds when older.

This advice will cost you hundreds of thousands of dollars. There's never been a 5-10 period in U.S. history where bonds outperform stocks unless you look historically and pick and choose the perfect dates to buy corporate debt. In the biggest stock market slumps in US history if you just held (or ideally bought more) you'd be doing very well in 3 years, even less. This happened again even this year.

2008 recession, dot com burst of 90s, black monday, covid this spring. A 100% all equity portfolio would have not only handled those setbacks fine but fully recover and make off like a bandit in 1-3 years. This approach only screws you if you are planning to retire on a certain year, and your portfolio loses like 30% of its value, and for whatever reason you cant wait another year or two OR you have liquidity issues (shouldnt be the case if you have enough in cash to cover a few months finances though).

By invest in property do you mean get your own house? Or an investment property? If you dont have the capital I'd recommend getting a multi family and doing owner occupied - I got into real estate this way and was able to get multi unit housing for less than 12k.

If you are talking about saving for a downpayment of your own then you should just continue being a rentcel and investing that money srs. Home ownership financially is a dumb decision for a lot of people, and investing for your future should be prioritized over buying a home

2 years ago you could sign up on something like Ally and get a 2% return on savings. that's pretty legit tbh. i was all about it.

today, forget it. ally is at 0.5 and that's pretty much as much as you'll get. it is a waste and i agree it makes more sense to invest it properly

They don't teach any of that in school, so what do you really expect?? They don't even touch up on investing. I thought stacking money in your savings was the right way to do it

You make it sound easy, but I read nightmares time and time again.

misc armchair "economists" wrong again! before the FED crashed the dollar a la 2008 with interest rates infinitely at or near 0% a savings account would yield better than 5% a year [even higher than 12% in the 80s] this goes for bonds as well. A safe alternative to gambling in the **** market.

At one point a savings account may have value but those days are long gone my friend

Repped for preaching truth to the people.

Jfl enjoy 0.05% APY against 2% inflation you stupid cuck!

Can you recommend any good sources on investing?

It's not 'easy' but it's not necessarily hard either - and not nearly as expensive as people think it is. Just goes against what a lot of people are taught on finance.


Nightmares can certainly happen if you have the wrong tenant though - fortunately no issues here yet but have heard nightmares as well

One of my friends saved for a house for 10 years. Wanted a 25% downpayment to avoid PMI. Doesnt use a credit card except emergencies, doesnt invest in stock market, put's it into savings. This is get a pat on your head 'good boy' boomer type financial thinking. Sure it's better than the idiot who spends themselves into debt - but will still cost you hundreds of thousands if not millions over the course of your life.



To make money investing you just have to be ok buying investments with your money and not touching or even looking at it for years. Patient, boring, but worth it

This is smart thinking bro.


My call out was more to the person that saves their employer match only, no more, in the 401k. Puts most of their money in checking. And then puts $500 - $1,000 or whatever in savings every month and feels good about it. That wont get you any money at all

3-6 months in cash in your liquidity accounts (saving/checking) every other penny earned going forward should be invested in some material way.

A good goal is to max out the two retirement accounts annually Roth IRA and 401k. Beyond that if you have the appetite and ability just a traditional brokerage account to buy and sell equities. My goal is 50% of income invested this becomes easier once you become a high earner in years past certainly not possible.

They are good for emergency funds though and if you can't stomach any potential losses and need the money right away - transfer from savings to checking account in under a second

I also disagree with using a savings account when you're saving for a large purchase.

I'd rather risk selling stocks at a loss or delaying a purchase than accepting 0.03% interest from my bank (and a 0.6% "high yield" account isn't much better).

idk what large purchase that putting into savings would cover.

Things like cars or houses you generally should be able to wait out a market downturn and avoid selling at a loss. Have the money invested and want a car but the market is down 15%? Well tough it up buttercup and wait a few months or a year.

Now things like medical expenses (should be mostly HSA tho) or emergency funds/repairs on a house/car that you dont plan for can force you to sell for a loss which sucks. But in the long run it's better to invest that money than have a 10k 'what if' savings account.

If you are too risk averse that you are worried your plumbing might break, car needs new parts, etc. and need money in savings instead of in the stock market then you will never make that biscuit. So agree with your mentality 100%

My father saved for 7 years for a down payment. Realized he could do what builders were doing. With zero experience went to the bank, got a loan, and started two houses. He ended up building around 500 homes before moving into small businesses.

He has always told me it is surprisingly easy, but then again he has been married 4 times, lost a ton of money to ex wives, and always seems to be stressed due to said social situations. Something about success in the self employed lifestyle seems to attract the gold digger sloots that will complicate your life.

That's awesome. How did he/who did he contract those home builds? How much did that cost compared to a normal down payment? Who did he sell them to? Dont really know much about that area but sounds fascinating

So I'm currently saving for a house, instead of just letting it pile in a savings account, where and who should I speak to about putting it to better use?

Because houses and rent are only going to get cheaper?

Lmao thanks for the advice

I've got a very small savings account for two reasons, first is that my work offers a 457b retirement which I can withdraw from penalty free upon terminating employment there (so it's my defacto emergency account if I get fired) and second is that I have credi cards i can use and redirect any savings / investments into paying them off. It's a slightly riskier strategy but math says i should safely get much better returns.

I do have an HSA for emergency health expenses which everyone who is financially competent and healthy should.

My job is very secure, if that wasn't the case I'd lean a lot more on a real emergency account.

Definitely recommend doing research on your own but Vanguard fund for high dividend yield or value index fund you cant go wrong with. Affordable, already diversified. If your flexible with the time period to purchase your house (aka you are thinking of doing it in 2-5+ years) then this is the way. If you are making that purchase in the next 12 months might be too risky as you could easily lose 10%+ of the value in that timeframe

He has always used sub contractors and hired a foreman to oversee the daily activities. No down payments on the construction loans, just have to show you have enough assets to cover the risk, but he always banked with a local bank that just gives him money when he needs it. All loans have traditionally been floated. He has moved into storage complexes and strip malls and gotten out of home building.

Homes were primarily contract, but he did build spec homes. (homes on speculation that people would buy them) The ratio I would guess was 70/30. He typically sold the homes himself. He would hire someone to sit in spec homes and just call him in if someone was interested.

He did some developing and claimed that was where the real money was. Which is why he started developing strip malls and storage complexes.

He is older now (had me in his mid 40s) and is coasting, but one thing he told me struck me as curious. He said when he was young he couldn't understand how he was able to out compete established businesses. He said as you grow you attach to a lot of overhead that eats profits and drains your energy. This saps your motivation and innovation.

Edit: On the bit more funny side of things, he also told me the most expensive thing he every bought was women. He said he calculated that he paid over $1000 for every time he got laid. And yes that included my mom.

Solid advice. Most of my money is in vanguard funds, had a few single stocks (mainly DIS) but sold to buy some investment property. It's boring but also simple. There is no need to hire someone to manage your money - they will just eat away at your gains. Like trying to lift and be a vegan at the same time.


Compound interest only gets joocy in time and when the base grows. But when it hits there is no better feeling. I was putting a lot of money from my paycheck out of college into the stock market but even market gains would yield a few hundred or few thousand bucks (whoopdie doo). But I remember being in my 20s and seeing 30k portfolio growth over 3 months just from vanguard funds and feeling like was finally getting on the good side of it. Not a brag by any stretch as other miscers have made plenty more, and investments like crypto or TSLA wouldve made you far more coin, but getting that 30k over just a few months for doing absolutely nothing but investing in boring ass vanguard funds was an incredible feeling

savings is better than keeping the money in ur wallet though or in a safe. still get that tiny % interest

but then the average person has like only $10,000

im not finacially literate but i see alot of scam advisors on youtube who are saying having money not doing anything is a bad thing,

while encouraging them to invest in there own portfolios while they are going broke due to covid