Finance Q: Im 23 and have 25k in a low interest bearing savings account. I have a few thousand in my checking which will be used to pay for moving expenses and necessities. I will be renting for the next few years, and don’t think I will need the savings any time soon, but like it there for security god forbid I need it.
Should I be investing that 25k? I don’t want to have to worry about pulling from any retirement accounts early on, but not sure if Im “wasting” potential with it in savings.

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Throw it all into dogecoin

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Done

Open a regular investment account (not IRA) and put it in ETFs like VONG and VOO. Schwab, TD Ameritrade, and Fidelity all have apps that charge no commission for trades.

You’re right to worry about the liquidity stuff with retirement accounts/not wanting to pull out. A taxable account means you don’t get tax advantages for money in 45 years, but you can more easily access it today while still getting very good returns.

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I’ll give you the standard advice w/ what it looks like for us as an example. I won’t address debt because there’s a couple ways to deal with that. This is purely using the most to least advantaged accounts.


1. 6 months of expenses in an Efund ($25K in savings account). For CF management purposes we keep an extra $5k in checking so we aren’t moving funds around.
2. Contribute to 401K up to Match
3. Max IRA (Roth/trad you decide)
4. Max HSA
5. Max 401K
6. Taxable brokerage

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I put 10% down, but could never have afforded to do so if I maxed out my 401k every year.

I have a total savings rate of ~33%. That’s roughly 2.5 times the US average. I’m not arguing against hardcore savings. I just don’t believe tying up my money in accounts that are difficult to access and give me minimal tax benefit is worth it.

Your effective tax rate early in your career is minimal. You’re tying up your money for use on medical expenses that are unlikely to be immediate and out of an unlikely fear of poverty in your 70s for a tax savings that doesn’t really amount to much. Yeah, there are ways to get it out of a 401k, but that also defeats the point of a retirement account.

Maxing out HSA and 401k makes much more sense later in your career when tax rates are higher. In your 20s, the flexibility that comes with a taxable brokerage account more fits your needs after you contribute a base amount to 401k.

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I put my emergency saving/extra cash into a crypto app (AnchorUSD) but I dont invest it in any crypto. The app uses it in their investments(just like a bank would) and they pay interest just for having money with them (7.8% ish). Interest paid out daily as well so it stacks.

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Also look up HM Bradley for a higher interest rate liquid savings

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Also have 10% going to 401k and max out roth

Do you have a fund for emergencies?

Then I would not invest it. I would estimate your monthly expenses and decide what you want to keep as an emergency fund. It may bony be all of what you have. If so, you could think about investing the surplus

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I also always forget I have the Acorns Investing app. Anyone use this? I only have a small amount in there but its easy to just deposit extra cash when you have it through the app

A lot of ppl consider apps like that trading instead of investing. There are accounts more similar to 401ks investing wise that you could open instead for large sums of money

When you say "next few years" how many do u mean? If u mean 2-3 might be good to just keep that down payment in savings, if you mean 5+ than looking at other options could be a good fit.

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