As the title says I am trying to see where people stand on this. Obviously this is all personal preference. But that is what I am after.

After depleting our savings when buying our apartment 2 years ago, we’re about to cross 6 months liquid savings in just plain old savings account with ability to immediately withdraw money.

(To clarify that is 6 month assuming 0 income, which is very unlikely given the social system of our country - so realistically we have even more in savings.)

As you can imagine, the interest in this account is not great, so I want to set a limit as to when we stop dumping every spare penny into the savings account and begin doing other things (likely try to invest).

  • @[email protected]English
    6•9 months ago

    It depends on what alternatives I have available. Prior to this year, I was aiming for 3-6 months of liquid savings and the rest in my investment accounts.

    Now that reasonable interest rates are available, I have changed my priorities. My goal now is 2 months savings in my checking account. This allows me to cover nearly any expense that comes up without the annoyance of transferring money to cover it.

    I keep another 1-2 months of expenses in a MMF earning >4% interest and immediately available for withdrawal.

    Then I have a decent amount (no particular target) invested in a short-term treasury ETF (TFLO) earning >5% interest, but it takes about a week to sell and transfer funds if I need it.

    Altogether, I’m probably keeping 6-12 months readily available, but most of it is earning interest now. I would also likely get 3-6 months severence if I lost my job and could probably cut back on some expenses to stretch things a bit further.

    Finally, I used to contribute to a Roth 401k (I’ve since switched to traditional 401k), so I should be able to access those contributions without penalty, if needed. This would only be relevant for someone in the US though.

    • @sugar_in_your_teaEnglish
      3•9 months ago

      You may be interested in switching your checking to a brokerage like Fidelity or Schwab. Some benefits:

      • at least at Fidelity (haven’t checked Schwab), your checking can be invested in a money market fund - mine gets >4% interest
      • access to your Treasury ETF much sooner
      • Fidelity and Schwab refund intentional ATM fees (depending on account type)

      Basically, you’d get better interest in your checking and fewer accounts overall.

      I switched late last year and I love it. My structure is:

      • Fidelity Bloom Spend - main checking, core is SPAXX, only has 2-3 weeks spending money
      • Fidelity Bloom Save - main savings, core is SPAXX, and has ~1 month spending money, plus Treasury bills that make up the rest of my efund
      • Fidelity Cash Management Account - usually near $0, but I’ll load it with some cash when I travel so I can use the free international ATM feature as needed, core is a basic savings at ~2.5%

      SPAXX gets just under 5% right now, and it’s nuts that I’m getting that in my “checking.”