I am a 28 year old single male and I have about 30k USD in my retirement account and 100k USD in my savings and checking accounts. I'm on track to save another 30-40k through the rest of the year as a remote consultant (business has been picking up). I have no debt and I live modestly. I don't believe I'll ever be married or have children. I live in Ohio, but in terms of buying a home, would be fine moving elsewhere. I'm trying to figure out what to do with the money I have saved. My main goal is to, with low risk, secure a modest lifestyle for myself so that I don't have to worry about money much even during severe multi-year economic downturns (my family had a hard time during the great recession when I was finishing up high school so that's probably why I'm fixated on this).

The leading proposition in my mind is to just sit tight for another year or so to ensure I continue to have good cash flow and then buy a small house in cash. That slashes my housing expenses and "invests" my money at least to the extent that it should keep up with inflation better than a savings account, and even if it doesn't, I still have a roof over my head.

Otherwise I know about CDs and treasury bonds and such but am concerned about what happens during periods of high inflation. I am wary of stocks.

Any thoughts? Thanks in advance.

  • 1
    Where do you live, and do you work in the same jurisdiction (given you mention remote work). This is a pretty broad question as-is and some specifics may make it more answerable. Jul 16, 2020 at 14:03
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    It's made even more broad by not mentioning any currency at all. 100,000 Japanese yen or 100,000 Bitcoin? Jul 16, 2020 at 14:39
  • You'd be better off, on average, buying the house with a mortgage and 20% down payment, and leaving the rest invested, since mortgage rates are currently ~3%, and the market historically returns about 7% after inflation. If in the US, you might also be able to deduct the interest from your income tax, at least for the first few years.
    – jamesqf
    Jul 16, 2020 at 16:47
  • @jamesqf On average, yeah... Remember the current financial system has only existed for about twice as long as a mortgage. So, also don't do anything too risky - make sure you won't lose your house if the market crashes.
    – user253751
    Jul 16, 2020 at 17:48
  • @user253751: You must have a really long mortgage, since stock and other investments have been around for centuries. E.g. in Jane Austen's books, her financially-independent characters had money invested in government bonds - the "four percents" - and others had money invested in the 'Change (London Stock Exchange).
    – jamesqf
    Jul 17, 2020 at 0:40

1 Answer 1


First of all, I think you have a great plan to avoid short term downturns by eliminating debt and controlling spending, but I think you should have different "buckets" of savings that will help you get through downturns and grow your savings for retirement.

The first step is to make sure your immediate cash flow is sufficient (you're not spending more than you make). It sounds like you're there and want to stay there.

Next, Build an emergency fund that will let you weather short downturns. 3 to 6 months of expenses is a common rule of thumb, depending on how stable your income is and how risk averse you are.

Next, focus on long term savings goals. This is where I question the desire to just "beat inflation". Inflation in the US (which I'm assuming based on some of the terms you use) is only about 2-3%, while the S&P 500 has a total return of 10-12% over long periods.

To see how big a difference that is, let's take your 30k and just let it sit for 30 years until you retire. At 3% annual growth, your ending balance would be about 73k. That won't be enough to live on since it would still be equivalent to 30k in today's dollars. But at 10% growth, your ending balance would be 523k! That's equivalent to 215k in today's dollars, assuming the same 3% inflation. And that's not putting anything else in - as you add more, the difference increases significantly.

Yes, you'll have highs and lows, but it's a retirement account. You're not supposed to touch it for 30 years. So what do you care if it goes down 20% one year when you know from history that the market has always rebounded and gone higher than it was before the decline? Your short term savings need to be safe and liquid, but you can afford to take more risks in retirement account when you're young in exchange for higher returns.

So to answer the question, my advice is to keep 6 months of expenses in a savings account and start investing the rest. If you're not comfortable with "stocks", then talk to a local investment advisor (preferably one that doesn't primarily sell insurance) that can teach you about the markets, and show you index funds that have more safety than individual stocks. When you're comfortable investing, start moving funds into a retirement account, and then other investments when you reach the annual limits of your retirement savings.

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