So I have been saving up for a while, from college to now maybe $20k, and I keep it in a bank and get like no interest but I can withdraw my money anytime I want.
Due to using the money to pay for my credit card per month and getting my workplace to transfer my the money there I can’t deal with savings accounts that require me to deposit a huge amount and not expect it to go up or down. I would say I can save up to 24k slowly but also quickly go back to 19-20k. (Health and vet)
I heard about a different type of savings (not Roth IRA) but similar, you put like say 20k and get interest on it so you end up with like 20k+400. Downside is I can’t withdraw my money for a year??
I’m not sure which banks have this program and how much I can invest or should invest, I feel like I’m 5.
In: Mathematics
Certificate of Deposit (CD) is what you are referring to. CDs require that you keep the money locked up for a certain amount of time.
High Yield Savings Account (HYSA) are online accounts that get you a higher interest rate (~4.5% right now). You can’t instantly withdraw from it like savings from a local bank – since have to deposit and withdraw from it through a bank transfer. A HYSA with Zelle support can send money instantly- but you still need a secondary bank if you want to get it as cash.
Roth IRA, Trad IRA, 401K are not savings accounts. These are retirement accounts. If you withdraw from a Trad IRA and 401K, you’ll have to pay tax + a fine on top of it. Roth IRA is the exception. You are able to withdraw the amount you contributed at anytime with no penalty (but you do have to fill out additional paperwork during tax season).
The alternative to a HYSA is to open an investment account and invest your money into treasury bills like FZSXX for Fidelity or SNSXX for Schwab. Treasury bills are an investment, which is not FDIC insured. Technically, you can lose money investing in treasury bills. However, that is almost never going to happen unless the US government is collapsing. The upside of this is that the return is higher than a high yield savings. The downside is that you have to sell the asset and wait for the funds to settle before you can withdraw it. This means that it will probably take about a week to get money out if you need it.
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