Needing Advice - where to keep my "savings?" (Ally, Betterment, etc?)
Just started using YNAB and am super excited about its potential.
I've got an "emergency fund" category in YNAB that says don't touch on it. And I could just simply keep that cash money in my normal bank Wells Fargo account, but I'm learning that maybe that money should go into a High Yield Savings Account?
What do you think? Should my Emergency Fund be in a different bank than where my checking account is?
I'm also trying to save up for other things (like house down-payment, and have a Roth that I'm going to try to contribute more to) so thinking some of the "Robo-Investors" like Betterment could help me with? Thoughts?
p.s. I've also got quite a bit of student debt, but only from the government, so I'm thinking it best to pay that off while also saving for a house/retirement?
I keep almost all of my budgeted money at Ally. I have no complaints.
I wouldn’t worry about putting the emergency fund at a different bank, but someone who’s worried about security — at least it’s a second login that has to be compromised — or stability — both banks would have to have issues at the same time — might worry about doing that.
As far as the student debt, I’d weigh the interest rate and the fact that it’s pretty much non-avoidable against expected return if the money is used for something else.
The savings account at my credit union pays 0.05% interest, so I haven't used it in 20 years. It's a great CU for everything else, just not savings. I mostly use Ally, and also a Capital One savings acct that finally went high yield.
I use Schwab Intelligent Portfolios for my robo accounts. I have a couple of Roths there. Over the summer I needed to stash more cash and wanted to try to beat Ally's return. So I opened a very conservative income based intelligent portfolio and I keep it on budget. In addition to the starting balance, I only record interest and dividend payments, and keep an eye on the balances to make sure the actual balance doesn't go below my YNAB balance. In the past 6 months that has not been an issue at all since it's appreciated over $1000 than what I have in YNAB.
So that strategy carries a little more risk, but is working for me. To start with, definitely find yourself a good HY savings account. And research the fees on the various Robo services. Vanguard has one now too that sounds popular.
You have a few options, depending on how liquid you want to be:
* Checking account paying interest (these do exist: https://www.nerdwallet.com/best/banking/online-checking-accounts)
* Savings account paying interest (NerdWallet will have links to these as well)
* Brokerage account with money markets paying interest (I use Schwab as well, since I can easily transfer to my checking and back)
* CD ladder
* Liquid mutual funds or cash equivalents (perhaps with a Robo adviser)
* Taxable brokerage investments (though be wary of capital gains taxes if in the US for short-term holdings)
* Retirement investments (moved off budget once the liquid reserves reach enough of a level)
You can also look into automated tools ala Acorns or Qapital or Betterment to help automate the savings. Though my advice would be to use categories for this and only consult your actual balances in accounts monthly or at your pay frequency.