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
Plenty of online banks have accounts like this, you can search up high yield savings accounts with the bank you’re currently using or any other local banks. Check out what their terms and conditions are since they’re different from bank to bank and even account to account.
I’m not in the US so I can’t use a US example, but I currently have 2 of such accounts.
Account A gives me an annual interest rate of around 5%, I can withdraw my money at anytime and there’s no minimal deposit. But the interest would only apply for the first $15k I deposit every year. Meaning if I say deposit $20k to within a year, only $15k would get the 5% interest, and the remaining $5k is money just sitting there that I should be investing somewhere else.
Account B is a term limit lockup that gives a variable interest rate depending on how long I lock it up for. I basically get more interest if I lock up that money for 2 years than 2 months for example. The kicked of course is that I’m not able to touch that money until the term is up, so this would be money that I don’t need immediately and I have no problems with just leaving it sitting around and pretending doesn’t exist until I’m allowed to withdraw it plus interest. But there’s also no limits to how much I can deposit into this account. I can deposit $1k or $100k and I would still get interest on the full amount.
There are pros and cons to each as you can tell. Like if I have an emergency fund, I wouldn’t put it into Account B because there are times I might need that money today. If I need to get a medical procedure done or an expensive car repair, I can’t be waiting around for months to get money freed up.
As for how to budget, you just need to sit down for a day and go through your finances. Like how much are you really spending every month, is there money you can afford to set aside for investing. Like do you really need $20k just sitting in your savings account, or can you afford to take half of that and put it in a high interest account for a year? Personally, I barely have $2k in my savings account (with its glorious 0.01% interest), because there’s about as much liquid cash I really need with my current lifestyle. The rest of my money are all in high yield accounts or brokerages passively earning money.
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