OP
OP
This figure should include investments, not just savings accounts.
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Savings rate hits lowest since financial crisis as Americans take on more risk
- Thread starter entremet
- Start date
I have three accounts: My checking account with bank A that is used to pay off all of my bills; another checking account with bank B that is used to store away a few thousand of easily accessible emergency funds; and an investment account invested in index funds with Vanguard that is funded periodically by bank B. Whenever bank B gets a little over a few thousand, then I transfer a thousand to Vanguard.
This has been my process for a year.
This has been my process for a year.
The only thing I'm not quite certain of in regards to the cyclical recessions is the timing. There's little doubt in my mind a recession will happen, I just think it might be a little longer than the typical decade-- to the point you could probably convince me of a cycle pushing closer to 15-20.
Anecdotal, but from working in multiple different-sized institutions since the last recession, the biggest issue right now is the institutions are so flushed with cash that it's putting downward pressure on deposit rates, which in turn drives all kinds of money into the market. Because everyone was so terrified to lend post-2008, the balance shifted to something completely out of whack which is throwing off the typical cycle. Throw in some market disruption from non-traditional lenders (i.e. SoFi, Kabbage, etc) and you have a recipe for uncertainty-- even more cash on hand, even fewer loans, even more downward pressure on deposits.
Still, and I say this as someone risk averse so read accordingly, balance is key. I would never put everything into one ETF or count on just my 401(k). Even within my 401(k), I've diversified quite a bit and I'm not as aggressive in my later 30s as I was in my early 20s.
Just my $.02 (at .05% APY)
Anecdotal, but from working in multiple different-sized institutions since the last recession, the biggest issue right now is the institutions are so flushed with cash that it's putting downward pressure on deposit rates, which in turn drives all kinds of money into the market. Because everyone was so terrified to lend post-2008, the balance shifted to something completely out of whack which is throwing off the typical cycle. Throw in some market disruption from non-traditional lenders (i.e. SoFi, Kabbage, etc) and you have a recipe for uncertainty-- even more cash on hand, even fewer loans, even more downward pressure on deposits.
Still, and I say this as someone risk averse so read accordingly, balance is key. I would never put everything into one ETF or count on just my 401(k). Even within my 401(k), I've diversified quite a bit and I'm not as aggressive in my later 30s as I was in my early 20s.
Just my $.02 (at .05% APY)
I have investments in only an admiral 500 index fund through Vanguard. Would you recommend investing in another fund just in case?
I'll start by saying I don't hold an investment license and my advice outside of banking products comes from having close relationships with the brokerage arms of places where I've worked.
Now, with it being an index fund you're going to have some built in variety just do its nature of course. So if I were going to diversify from there (which I do but ymmv) it's into something not as exposed to market forces. For me, that meant a portion in a bond fund and even some in a fixed annuity. I also keep a couple months of expenses liquid but again I say I'm more risk averse than most.
I also meet with my guy (who was a former work partner that also manages my parents' retirement) every quarter or so just to stay engaged. I'm no millionaire but if you're not getting that level of attention, there's others that will be happy to.
Thank you very much for the advice. I will check out a bond fund. I'm also risk averse and I'm not looking to gamble with my money. I'd like it slow and steady.
Well, duh, interest rates are still in the range of historic lows. If rates are low, as they have been for the last 10+ years, it encourages borrowing and discourages saving because credit is cheap and savings would not outpace inflation.
I have a Betterment account and that's pretty much it. I've considered opening an IRA with them. Worth it? What else should I do to safeguard against recession? I think long term, so I could probably take short term insanity.
OP
OP
I've never done business with Betterment. I've heard of them. But I do like Roth IRAs a lot--tax-free growth. You can open them up in tons of places.