Best plan to open up a savings account? | TigerDroppings.com

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rpg37
LSU Fan
Walls, MS
Member since Sep 2008
16510 posts

Best plan to open up a savings account?


I am 26, single, have a 403(b) plan, and net about $3,800 a month. I am looking at trying to generate more with my money and opening a savings account. Where is the best to go to gain interest on a savings account? My bank offers virtually nothing in interest, so it's pointless to open one up. Should I just put more into my 403(b) or just keep more money activated in my regular checking account?






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LSUTigers00884
LA-Lafayette Fan
Lafayette
Member since Oct 2011
739 posts

re: Best plan to open up a savings account?


It's pointless to invest in a savings account. Invest into some mutual funds. I would go really conservative if I were and you can look at it as a savings.

Eta: but a savings account is 3-6 months total expenses. So maybe 9000$-12000 for you?



This post was edited on 5/4 at 12:47 pm


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rpg37
LSU Fan
Walls, MS
Member since Sep 2008
16510 posts

re: Best plan to open up a savings account?


Do you have the ability to withdraw from a mutual fund whenever you want? Should i just put more in my 403b? I can't touch that until I'm 59 1/2, though, and retired.





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roguetiger15
LSU Fan
Member since Jan 2013
3447 posts

re: Best plan to open up a savings account?


you're 26, you have the ability to be more aggressive than a savings plan





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skidry
LSU Fan
Member since Jul 2009
911 posts

re: Best plan to open up a savings account?


as previously stated, put 6 months salary in an emergency fund that is very liquid. Then, max out all of the tax deferred savings you can (401k, ira, etc), then, fund additional savings into investments of your choosing. At 26 and single, IMO, you should be aggressive and take on a good amount of risk.





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baytiger
LSU Fan
Houston
Member since Dec 2007
43074 posts

re: Best plan to open up a savings account?


capital one 360 is giving 0.75% with a savings account right now.. it's shitty but it's pretty high compared to whatever you'll find at your bank







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The Easter Bunny
Georgia Tech Fan
Minneapolis, MN
Member since Jan 2005
41769 posts

re: Best plan to open up a savings account?


like most threads on this board, my answer is Roth IRA





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rpg37
LSU Fan
Walls, MS
Member since Sep 2008
16510 posts

re: Best plan to open up a savings account?


quote:

answer is Roth IRA


Can I do this on top on my 403(b) plan and as a public employee? Also, is there a penalty for early withdrawel? I want an emergnecy fund basically, but I want that money generating something...thanks for the input!






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LSUtigerME
LSU Fan
Walker, LA
Member since Oct 2012
528 posts

re: Best plan to open up a savings account?


I use Capital One 360 (old ING Direct), and a Sharebuilder account, along with a "high" interest checking account. All of these are through Capital One, so it's easy to manage and transfer.

I'd suggest having a liquid amount of money available in checking/savings for any immediate emergencies (ie 1-3 months). Then you can be more aggressive with a full savings/emergency fund. CapOne360 will give you 0.75%, and SB will give you options to invest in stocks, funds, and ETFs for a relatively low expense ($4 for auto investments, and coupons are easy to find).

You could also set up a Roth IRA in addition to your 403(b). This could serve as another emergency source, but should be a last resort. There is no penalty for withdrawal of contributions, but funds can only be replaced at the annual limit. Withdrawal of earnings are penalized unless a "qualified" distribution.



This post was edited on 5/4 at 9:00 pm


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Siderophore
LSU Fan
Member since Nov 2010
3334 posts

re: Best plan to open up a savings account?


quote:

Do you have the ability to withdraw from a mutual fund whenever you want?


Define whenever.

There is approximately a 2 business day delay to sell shares of my Vanguard fund and have it wired to my bank (which also incurs charges).

You want to hold the shares for at least a year though before selling them though for tax reasons.






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Siderophore
LSU Fan
Member since Nov 2010
3334 posts

re: Best plan to open up a savings account?


quote:

Can I do this on top on my 403(b) plan and as a public employee? Also, is there a penalty for early withdrawel? I want an emergnecy fund basically, but I want that money generating something...thanks for the input!


Yes, because contributions are done with after tax dollars.

You can contribute up to 5k a year, and can withdraw whatever you put in tax free, hassle free, no questions asked. Problems only emerge if you attempt to take earnings, although you can withdraw up to 10k in earnings (tax and penalty free) to pay for the down payment of your first house.

As you fall in the 25% tax bracket, it is your best bet. You prob will want to only put money in a taxable account after you are baller enough to hit the limits on all forms of IRA accounts.







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Siderophore
LSU Fan
Member since Nov 2010
3334 posts

re: Best plan to open up a savings account?


FWIW, I keep a month's salary at least in my savings account, and the remainder of my emergency fund (building towards 6 months total) is in a Roth account, specifically Vanguard's STAR fund which is highly diversified and is 60/40 stock/bond mix.

I also have a Wellington as my "real" retirement mutual fund in the same Roth account, and all of my Roth 401k goes into a Vanguard Target Date Retirement Fund

My age and income are similar to yours.



This post was edited on 5/5 at 1:55 am


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