Teach me about savings account

[E equals MC2]

1. What's a good place to save my money? ING Orange? Recommend anything else?

2. Since I never dealt with them, what's diff between savings vs checking? Savings is not as liquid right? How long does it take to take it out? Is there a penalty of sort for taking it out?

3. For emergency funds, do you have them sit on your checking account or savings? Is savings liquid fast enough to have the emergency fund in it?

4. After 401(k) & anticipated bills, I plan on shoving everything into savings account. That's a pretty good way to mgmt money right?

 

[Nitemare]

Originally posted by: E equals MC2
1. What's a good place to save my money? ING Orange? Recommend anything else?

2. Since I never dealt with them, what's diff between savings vs checking? Savings is not as liquid right? How long does it take to take it out? Is there a penalty of sort for taking it out?

3. For emergency funds, do you have them sit on your checking account or savings? Is savings liquid fast enough to have the emergency fund in it?

4. After 401(k) & anticipated bills, I plan on shoving everything into savings account. That's a pretty good way to mgmt money right?

1. saving's accounts blow percentage wise but it is easy to get you money out of usually without any penalties. Put your money in an index fund for long term investments or if you feel lucky choose anotherfund.

2. you can usually withdraw money right when you want it, but are usually limited to so many a month and usually have to have a minimum amount in the account.

3. I don't see why not.

4. No. Savings accounts are only good for short term investments and for emergency money. It rarely if ever beets inflation.

 

[E equals MC2]

Originally posted by: Nitemare

Originally posted by: E equals MC2
1. What's a good place to save my money? ING Orange? Recommend anything else?

2. Since I never dealt with them, what's diff between savings vs checking? Savings is not as liquid right? How long does it take to take it out? Is there a penalty of sort for taking it out?

3. For emergency funds, do you have them sit on your checking account or savings? Is savings liquid fast enough to have the emergency fund in it?

4. After 401(k) & anticipated bills, I plan on shoving everything into savings account. That's a pretty good way to mgmt money right?

1. saving's accounts blow percentage wise but it is easy to get you money out of usually without any penalties. Put your money in an index fund for long term investments or if you feel lucky choose anotherfund.

2. you can usually withdraw money right when you want it, but are usually limited to so many a month and usually have to have a minimum amount in the account.

3. I don't see why not.

4. No. Savings accounts are only good for short term investments and for emergency money. It rarely if ever beets inflation.

What do you suggest I do? Based on that, I'm thinking:

1. Keep minimal fund in my checking as a buffer while paying bills.
2. Establish an emergency fund in savings account (couple grands to start out).
3. Once 2. is done, throw everything into index fund / any type of investing.

 

[nonameo]

Originally posted by: E equals MC2

Originally posted by: Nitemare

Originally posted by: E equals MC2
1. What's a good place to save my money? ING Orange? Recommend anything else?

2. Since I never dealt with them, what's diff between savings vs checking? Savings is not as liquid right? How long does it take to take it out? Is there a penalty of sort for taking it out?

3. For emergency funds, do you have them sit on your checking account or savings? Is savings liquid fast enough to have the emergency fund in it?

4. After 401(k) & anticipated bills, I plan on shoving everything into savings account. That's a pretty good way to mgmt money right?

1. saving's accounts blow percentage wise but it is easy to get you money out of usually without any penalties. Put your money in an index fund for long term investments or if you feel lucky choose anotherfund.

2. you can usually withdraw money right when you want it, but are usually limited to so many a month and usually have to have a minimum amount in the account.

3. I don't see why not.

4. No. Savings accounts are only good for short term investments and for emergency money. It rarely if ever beets inflation.

What do you suggest I do? Based on that, I'm thinking:

1. Keep minimal fund in my checking as a buffer while paying bills.
2. Establish an emergency fund in savings account (couple grands to start out).
3. Once 2. is done, throw everything into index fund / any type of investing.

sounds like a plan to me.

 

[Delita]

Savings accounts have become much managable with online banking. You are usually allowed up to six transfers from your savings account each month. After the six the bank has to classify the funds as a different type of desposit. Its best to keep as much as you can in the savings and then just transfer over to your checking account when you need to pay bills etc. Most banks allow free transfers between banks as well, but double check to make sure if you are thinking about opening a savings at another place besides the bank you have a checking account with. You can compare different accounts over at www.bankrate.com. You might want to look into something a little more illiquid if you want some better returns however.

 

[maddogchen]

a good thing to do is if your company does direct deposits, is to ask them to deposit 10% or whichever percent you know you can spare directly into your savings account.

a bad thing about savings accounts would be that many places limit the number of times you can withdraw from it a month. Thats why you should use it as an emergency fund. Use your checking account for other things.

So start an emergency fund with a savings account. Estimate how much money you would need if you were jobless for 6-8 months. Start saving for an emergency fund worth that much. After you hit that point, start thinking of investing the maximum you can into a Roth IRA where you can do index fund type investing.

 

[E equals MC2]

Originally posted by: maddogchen
a good thing to do is if your company does direct deposits, is to ask them to deposit 10% or whichever percent you know you can spare directly into your savings account.

a bad thing about savings accounts would be that many places limit the number of times you can withdraw from it a month. Thats why you should use it as an emergency fund. Use your checking account for other things.

So start an emergency fund with a savings account. Estimate how much money you would need if you were jobless for 6-8 months. Start saving for an emergency fund worth that much. After you hit that point, start thinking of investing the maximum you can into a Roth IRA where you can do index fund type investing.

Isn't RothIRA for retirement though? If I want to be a home owner fast, I should be getting into short-term index fund and etc right? (aside from sufficient 401k of course)

 

[MegaVovaN]

IMO you should invest in RothIRA all along the way. Even if it's not much.
Compound interest is on your side. Time = money.

And yes, it's for retirement.

 

[sjwaste]

I would open an account at Fidelity. You can do checking there with no fees and decent interest (no minimums) as well as get your ATM fees refunded. You can also set up a Roth IRA there and a regular brokerage account. That's my current setup. Lots of good money markets for your liquid funds as well as no transaction fee mutual funds for growth. Actual brokerage fees for trading (stocks, derivatives) are high, so I keep a separate Scottrade acct for that. But it's really useful to have this stuff in one place.

As a bonus, their checking acct has self-funded overdraft, so you can set it to take money out of your core money market in the brokerage acct if you want.

As far as allocation, now that you have no CC debt, Rule #1 is to NOT ACQUIRE ANY After that, fully fund a Roth IRA for the year, then worry about 401(k), assuming you'll be in a higher tax bracket in the future than you are now. I wouldn't fund retirement until you have a savings cushion for emergencies, though. Save 3-6 months of expenses, keep it in a money market like FSLXX, then fund retirement and also save some more on the side for a house or whatever other long term things you want outside of retirement.

Clear as mud?

 

[MegaVovaN]

http://zenhabits.net/

On the bottom of page, check out top "Finance and Family" articles

 

[Nitemare]

Originally posted by: E equals MC2

Originally posted by: maddogchen
a good thing to do is if your company does direct deposits, is to ask them to deposit 10% or whichever percent you know you can spare directly into your savings account.

a bad thing about savings accounts would be that many places limit the number of times you can withdraw from it a month. Thats why you should use it as an emergency fund. Use your checking account for other things.

So start an emergency fund with a savings account. Estimate how much money you would need if you were jobless for 6-8 months. Start saving for an emergency fund worth that much. After you hit that point, start thinking of investing the maximum you can into a Roth IRA where you can do index fund type investing.

Isn't RothIRA for retirement though? If I want to be a home owner fast, I should be getting into short-term index fund and etc right? (aside from sufficient 401k of course)

Always max out your Roth if you can, because it is pretty much the best way to avoid taxes on interest gained. Roth's can be index funds though...

 

[E equals MC2]

Originally posted by: Nitemare

Originally posted by: E equals MC2

Originally posted by: maddogchen
a good thing to do is if your company does direct deposits, is to ask them to deposit 10% or whichever percent you know you can spare directly into your savings account.

a bad thing about savings accounts would be that many places limit the number of times you can withdraw from it a month. Thats why you should use it as an emergency fund. Use your checking account for other things.

So start an emergency fund with a savings account. Estimate how much money you would need if you were jobless for 6-8 months. Start saving for an emergency fund worth that much. After you hit that point, start thinking of investing the maximum you can into a Roth IRA where you can do index fund type investing.

Isn't RothIRA for retirement though? If I want to be a home owner fast, I should be getting into short-term index fund and etc right? (aside from sufficient 401k of course)

Always max out your Roth if you can, because it is pretty much the best way to avoid taxes on interest gained. Roth's can be index funds though...

max out meaning put in as much as I can afford to?

 

[newb111]

Originally posted by: E equals MC2

Originally posted by: Nitemare

Originally posted by: E equals MC2

Originally posted by: maddogchen
a good thing to do is if your company does direct deposits, is to ask them to deposit 10% or whichever percent you know you can spare directly into your savings account.

a bad thing about savings accounts would be that many places limit the number of times you can withdraw from it a month. Thats why you should use it as an emergency fund. Use your checking account for other things.

So start an emergency fund with a savings account. Estimate how much money you would need if you were jobless for 6-8 months. Start saving for an emergency fund worth that much. After you hit that point, start thinking of investing the maximum you can into a Roth IRA where you can do index fund type investing.

Isn't RothIRA for retirement though? If I want to be a home owner fast, I should be getting into short-term index fund and etc right? (aside from sufficient 401k of course)

Always max out your Roth if you can, because it is pretty much the best way to avoid taxes on interest gained. Roth's can be index funds though...

max out meaning put in as much as I can afford to?

As much as you can afford, up to the max of $5000 per year.

 

[thomsbrain]

1. OK, first of all, this guy was in debt. His FIRST matter of business is to build up six months expenses in SAVINGS. Investing will have to wait for later. After the OP reach six months expenses, it will be up to him whether he needs to save for anything else short-term (like a car or down payment on a house). In this market, it would not be wise to do any kind of short-term "saving" in the stock market. There are great long-term investment opportunities right now, but you need to be able to kiss your money goodbye for five years or more to really see the benefit.

2. Usually savings accounts from the same bank as your checking account allow for instantaneous transfers, with a limit on how many you can do each month. "Online" savings accounts have similar limits and generally take several business days for funds to finish transferring.

3. Yes, savings is liquid enough for most people's short term needs. Unless you anticipate emergency needs coming up that can't wait for a few days. But usually "emergency" means you lost your job or you get hurt and need money for medical bills. In those cases, you have plenty of time to shift money out of a savings account.

4. For now, there is nothing wrong with that. See answer #1.

 

[thomsbrain]

Originally posted by: E equals MC2

Isn't RothIRA for retirement though? If I want to be a home owner fast, I should be getting into short-term index fund and etc right? (aside from sufficient 401k of course)

Your retirement should be more important than your house, IMO. There is no point in buying a house if it will be foreclosed when you retire because you didn't have enough savings and investments to support your lifestyle. Also, a Roth IRA accepts a maximum of $5000/year in contributions. If that's going to stop you from buying a home, you probably shouldn't be in the market yet.

 

[Special K]

Originally posted by: E equals MC2

Originally posted by: maddogchen
a good thing to do is if your company does direct deposits, is to ask them to deposit 10% or whichever percent you know you can spare directly into your savings account.

a bad thing about savings accounts would be that many places limit the number of times you can withdraw from it a month. Thats why you should use it as an emergency fund. Use your checking account for other things.

So start an emergency fund with a savings account. Estimate how much money you would need if you were jobless for 6-8 months. Start saving for an emergency fund worth that much. After you hit that point, start thinking of investing the maximum you can into a Roth IRA where you can do index fund type investing.

Isn't RothIRA for retirement though? If I want to be a home owner fast, I should be getting into short-term index fund and etc right? (aside from sufficient 401k of course)

I don't think using index funds to save for a house down payment is a good idea, especially if you want to be a homeowner *fast*. What if your investment loses value over the next year or two? It would probably be better to stick to something that at least guarantees your principal (CDs, savings account) if you are trying to quickly save for a house.