I have built up a decent savings ($30k) and placed it in an online bank's checking account with 0.76% APY. I am wondering if this is enough money that I should consider switching it to something higher interest so that I can make money, beat inflation, etc.

In general, I don't like taking risks financially. My gut instinct is to keep it liquid. But perhaps this is not the wisest thing to do. I would like your advice on the matter.

Some other information.

  • I'm an American living in USA.
  • I am 30.
  • I am single.
  • My rent is $500/mth, including utilities. This works for now, but I may want to move into a condo within 5-10 years.
  • I have zero debt.
  • I own my car, although I may have to replace it in 5-10 years.
  • Overall, my expenses are pretty low, and I bring in more income from my job than what my expenses cost me, so my checking account grows every year.
  • I have no retirement accounts (401k, IRA, pension, etc.)

Feel free to also chime in with other financial advice. For example, if $30k isn't really enough money to invest, at what point should I start investing, and how much? Is it unwise to not have any kind of retirement account? etc.

edit: I ended up creating a brokerage account at Ally.com and investing the money in SPY. SPY is an index fund that follows the S&P 500, so it is nice and diversified and there are no penny stocks. Very diverse and very safe. If the market is up, it is up. If the market is down, it is down. Anyway, an excellent decision. The last couple of months the stock market has been doing great and I've already made quite a bit of money. Also, the commission fee is only $5 per TRANSACTION, not per share. Very cheap. Thanks for all the advice.

  • Does your company offer a 401K, and does it match employee contributions? Commented Nov 2, 2017 at 10:38
  • No. I am self-employed. Commented Nov 2, 2017 at 10:58
  • How stable is your income? Is it likely that you might have to go through a time with little-to-no work?
    – Nosrac
    Commented Nov 2, 2017 at 13:02
  • Pretty stable. I have found a niche. There is low supply and high demand for my particular skillset. Commented Nov 2, 2017 at 13:04
  • 1
    @AdmiralAdama look into and start a SElf employed retirement account and put as much in as you can. You will thank me in 25 years.
    – Eric
    Commented Nov 3, 2017 at 7:31

2 Answers 2


General advice is to keep 6 months worth of income liquid -- in your case, you might want to leave 1 year liquid since, even though your income is stable now, it is not static (i.e., you're not drawing salary from an employer).

The rest of it? If you don't plan on using it for any big purchases in the next 5 or so years, invest it. If you don't, you will probably lose money in the long term due to inflation (how's that for a risk? :). There are plenty of options for the risk averse, many of which handily beat inflation, though without knowing your country of residence, it's hard to say. In all likelihood, though, you'll want to invest in index funds -- such as ETFs -- that basically track industries, rather than individual companies. This is basically free portfolio diversity -- they lose money only when an entire sector loses value. Though even with funds of this type, you still want to ensure you purchase multiple different funds that track different industries. Don't just toss all of your funds into an IT index, for example.

Before buying, just look at the history of the fund and make sure it has had a general upward trajectory since 2008 (I've bought a few ETFs that remained static...not what we're looking for in an investment!). If the brokerage account you choose doesn't offer commission free trades on any of the funds you want (personally, I use Schwab and their ETF portfolio), try to "buy in bulk." That way you're not spending so much on trades.

There are other considerations (many indexed funds have high management costs, but if you go with ETFs, they don't, and there's the question of dividends, etc), but that is getting into the weeds as far as investing knowledge is concerned.

Beyond that, just keep in mind it'll take 1-2 weeks for you to see that money if you need it, and there's obviously no guarantee it'll be there if you do need it for an emergency.

  • Should I just invest $10,000 in the S&P 500 and call it a day? Looks like it's had a 7.10% return over the last 10 years. @RonJohn Commented Nov 3, 2017 at 4:42
  • Also, who do you recommend I open my money market account with? @RonJohn Commented Nov 3, 2017 at 4:43
  • @AdmiralAdama I use Schwab, and I've been happy with their commission free ETFs. They all perform pretty well. I don't know if you can actually buy into the S&P 500 -- the best I've seen is buying ETFs designed to track with it (such as stock ticker SPY). As for what specifically to invest in, I'd personally spread it out a little more if risk is a factor -- reason being, even ETFs put ~5% into specific businesses. If that business goes belly up, the ETF will lose value. (cont)
    – bvoyelr
    Commented Nov 3, 2017 at 22:08
  • So if you dump small amounts of money into many ETFs that track with S&P 500, you're putting fractions of a percent into each business, giving you broad resistance to the whims of individual companies. So with Schwab, for example, offers 9 commission free ETFs, and fully half of them show the exact same growth curve as S&P 500. You can drill down more into their holdings to see which companies you're depending on (and sadly, there is some overlap), but investing broadly in all of them is a bit safer than sticking to one.
    – bvoyelr
    Commented Nov 3, 2017 at 22:12
  • One warning, though: most of the ETFs I've talked about tend to run heavy in tech stocks -- because tech has done very well in recent years. If you want to diversify, you'll have to look at ETFs for industries with lower, more stable returns. So if you trust tech, you don't have to worry too much. But if you want SOME money safe from it, you'll have to be satisfied with lower returns in something not so heavy in tech.
    – bvoyelr
    Commented Nov 3, 2017 at 22:14

Is it unwise to not have any kind of retirement account? etc.

Yes. :)

Why? Because they allow tax-free growth, and that's always good.

and placed it in an online bank's checking account with 0.76% APY.

If nothing else, move some of it into an online bank's savings account at 1.2% and the rest into a set of "laddered" CDs at about 1.5%.

Do that to your "six months emergency fund" money, and whatever money you plan on using for a condo DP.

Invest the rest.

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