Thanks in advance for any advice.

My questions:

  1. How much should I have in the bank as back up? Savings? What percentage do people usually save?

  2. What’s a good investment strategy in my early 20's considering I already have a 401k, etc? My personal choice is torn between a) buying an apartment in NYC and b) use the down payment to invest in financial markets

The housing market has been cooling down and with the expectation of rising rates and NYC welcoming more tech companies, this seems like a good choice. However, the return rate has to be pretty high (at least 10% annually) for me to mentally accept the fact that I’m reducing my liquidity. I doubt the return is possible under current economy.

  • 1
    Could you expand on "I already have a 401k, etc." Does that mean you're maxing out your 401k and IRA contributions, or just taking employer match?
    – Hart CO
    Dec 5, 2018 at 21:23

2 Answers 2


There are some general rules of thumb that are often repeated here. There are similar questions and answers you should research. While "it depends" is certainly valid, here is some common advice:

  1. Have an emergency fund with 3-6 months of living expenses.
  2. Save at least 10% of your income.
  3. Invest regularly in low-fee Index Funds (like the S&P 500 Index)
  4. Take advantage of tax-deferred or tax-free retirement accounts.
  5. If you employer matches 401(k) contributions, make sure you are contributing enough to get the maximum match because it is free money.

There's a popular rule of thumb that you should have 6 months income in savings. I'd like to see some statistics, because I doubt many people have anywhere near this much in savings. Personally, I keep about 2 weeks pay in my checking account. I have no savings account, but I have an investment account invested in very conservative mutual funds that I think of as my "savings". Right now I have a month's pay there but I usually keep about 2 months. I have another investment account that's more risky with 3 to 4 months income.

These days real estate is very difficult to predict. I wouldn't buy any sort of real estate as an investment per se. Buying a house or condo to live in, so that you don't have to pay rent forever, is a different thing. If you expect to live in it for at least several years that can be a good "investment". If you think that you can predict what will happen to housing prices in your area and want to put money down on that, feel free, but that's a fairly high-risk investment these days.

If you haven't maxed out your contributions to retirement funds, that's a good place to start. Especially if you get any sort of employer match. Lots of companies match 50% of employee contributions to a 401k up to some limit. If you're not taking full advantage of that, that's a 50% return in 1 day, you'd have a hard time beating that anywhere.

Obvious place to invest is the stock market. There are many choices of industries and individual companies to invest in. There are mutual funds and the like with a variety of risk levels.

  • 1
    The rule of thumb is some number of months of expenses, not income.
    – chepner
    Dec 6, 2018 at 18:50
  • @chepner For most Americans, that would mean more money. :-)
    – Jay
    Dec 6, 2018 at 20:14

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