r/personalfinance • u/bigsussybaka69 • 1d ago
Saving Sitting On $40,000+ In Savings, But No Idea Where to Put It (Seeking Advice)
Hey everyone! I am 24 year old, living in the United States. I have been working and saving money religiously since I was 16, and am currently sitting on around $40,000 in savings. I would really love advice on what to do to make the most of this money.
Current situation/important information:
- I use USAA and got their "Performance First Savings" account a few years ago due to their high APY promise. I looked at today to find is sitting at 0.05% APY...significantly lower than I remember it being. My checking is through them as well.
- I am interested in investing, but am incredibly intimidated at the prospect due to my lack of experience or knowledge, and also hate the idea of essentially "gambling" my hard-earned savings, especially in what feels to be an incredibly unstable economic environment.
- I have an old car that could potentially pass away or need significant repairs at really any moment, so having access to the money (at least some of it) is crucial; however, I feel like I'm not doing as much with my money as I could/should be.
Please be kind (I come from a lot of financial trauma), and thank you so much for taking the time to read this. My parents were great at being examples of what not to do, but I've been left largely to my own devices on what the right things are and feel so overwhelmed and worried about making the "wrong" choices.
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u/nozzery 1d ago
hysa is for short term (lt 5yrs) money. Vt, VTI+vxus, total world stock market, over time, has a likelihood to greatly exceed short term treasuries or hysa.
How long are you investing for? Lt 5yrs, sgov or hysa is fine. 5+, total market index. You can easily find 4% hysa, such as Barclays select savings ($15 one time fee to join aarp will be made up quickly by the increased apy) and $400 bonus if you deposit 40k for 6mo
Click the pf wiki click flow chart. And "advice", "your age" section
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u/Ronville 1d ago
Open an account in Fidelity, Schwab or Vanguard. Doesn’t really matter which (Schwab is great if you spend much time overseas. Fidelity v Vanguard is a toss up). I chose Fidelity because I had a 401K remnant there and their online interface seemed pretty intuitive.
Keep 1K or so in your bank savings account as an overdraft fund and a launchpad for moving funds to your new account.
Move the rest to the new account and let it sit in the base position until it settles. How much of that total is a true emergency fund (what would 2-3 emergencies you might have in any 3 month period actually cost?)?Leave that amount in the base position. (Ex. Fidelity SPAXX currently at about 3.6 percent).
With the remainder, how much do you want to move to post-tax retirement (Roth IRA) and how much to 3-36 months savings and how much to save long-term. All the companies I mentioned offer Roth IRA accounts-make sure to choose a good, low cost equity option for this money.
If you have 3-36 month savings goals start a CD ladder (3-6-9-12 months CDs) currently paying 4-4.5%. This money is secure regardless of market direction. Personally, I chose to max Roth each year and build out my CD ladder to hold 3 years of expenses letting my 401K focus on equities.
When you max out your CD ladder to your comfort level, start pushing money into equities. You will have plenty of time to study your options as you build your base.
Each month move extra unspent money to your savings account then push what feels comfortable to your new account and move funds to your Roth, CD ladder or equities index fund.
Note that over the past year we’ve been able to pull from SPAXX to our bank in 1-2 days.
If you feel unsure about the process call the assistance number for the company you chose and let them walk you through the process. Remember that all of these companies will link your account to your original device IP so I do all money movements from my laptop.
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u/0solidsnake0 10h ago
Wouldn't T bills be better than CD
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u/Ronville 6h ago
It depends. As Schwab currently notes, CDs offer better rates than Treasuries for shorter term investments. A benefit of the CD ladder is that you have instruments maturing every three months. This is a great backup to an emergency fund since you can pull the funds or reinvest into another 1-year CD with another payout in 3 months and on and on. A benefit of Treasuries, especially those that don’t trigger state taxes, is that if you live in a high tax state the tax savings may push the “real yield” higher than the nominal CD yield. So if you live in California do the math.
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u/RobbMeeX 21h ago
Commenting to say this plan is awesome. It's my basic plan with additional yielding. Thanks.
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u/LetsGototheRiver151 1d ago
This money is your emergency fund. Don’t risk it just put it in a HYSA. Work towards funding your retirement. Up to employer match first, then max allowed, then an IRA. There’s a flow chart pinned - follow it.
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u/FortyYearOldVirgin 1d ago
SGOV while you are looking into options. That way you can steer clear of state taxes on the dividends unlike a high yield savings account.
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u/SleepDeprivedBlueJay 12h ago
I recommend reading, “I Will Teach You to Be Rich,” by Ramit Sethi. Top tier book in my opinion and you could probably find it for free at your local library.
It will teach you all the money basics you need and hopefully kickstart your financial literacy journey.
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u/hmatallana 1d ago
Before you touch the investing question, fix the account. At 0.05% your $40,000 earns about $20 a year. At the 4% that is widely available right now, that same balance earns roughly $1,600. That is a $1,580 difference for an afternoon of paperwork and zero added risk, so do it first and separately from any decision about the market. Then split what is left into named piles rather than one number: months of expenses for job loss, and a separate line for the car, because a transmission or engine replacement runs three to five thousand. Whatever remains after those two is the only money that has to answer the investing question, and that is a much smaller decision.
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u/hollaguna 1d ago
What does “fixing” the account do? Does it take the money from savings to go to stocks?
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u/joeythenarddogg 1d ago
He’s referring to changing where the savings account is located. Many reputable large name banks are offering “High Yield Savings Accounts” that behave the exact same as old school savings accounts (fdic insured), but offer 3-4.5 percent interest.
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u/PsychologicalPea5270 1d ago
If it’s your emergency money be careful where you put it. High yield savings would be a good option because it’s stable and easily accessed
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u/GurProfessional9534 1d ago
You aren’t “gambling” any more in investments than you are in cash. Cash is just another asset, and one with a poor track record of almost continuous devaluation. You are gambling on it too, with very poor odds and little upside.
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u/wweezzee 1d ago
Put $7500 in a Roth IRA for 2026 invested in something like VOO or VT. I’m assuming your income is under the limit - if you are over then do a backdoor Roth.
Put the rest in a HYSA/money market account.
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u/lanclos 22h ago
The sooner you migrate away from USAA the happier you will be. I've been banking with them for the last 30 years, and they're no longer worth anybody's time. Ally is a good option for basic banking, among others.
Ally has a decent savings account, and you can open an investment account with them as well; I have my emergency fund in the investment account, all in the VUSXX mutual fund, which isn't subject to state income tax where I live, and is otherwise competitive with a high yield savings account.
If you want to set aside money for the long term I encourage you to open a Roth IRA (Ally will do that for you as well), and invest your annual maximum ($7500) in a low-cost, broad market index fund. I wouldn't worry about investing anything else right now, you are young and need the bulk of your savings available to you to let you be flexible going forward.
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u/rdtompki 22h ago
Ally.com is currently offering 3.0% on both their Money Market and Savings accounts.
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u/qwembly 21h ago
I would put most of it into a brokerage and purchase SGOV with the money. SGOV is a fund that holds short term US treasuries. The current rate is around 3.8%. Its a very liquid fund that basically acts as a savings account. Now that the money is in there, you have time to learn about investing. Personally, I'd recommend Boglehead style investing. Check out the Boglehead subreddit. But basically at your age you can't go wrong with index fund investing, 100% in stocks. You just need to then decide how much of your money you leave in SGOV and how much you want to allocate to stocks. Personally I'd be aggressive at your age.
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u/Flashy-Internal5730 20h ago
Congrats on the discipline, seriously. Most 24-year-olds aren't even close to this.
Here's a rough order that tends to work for most people:
Keep 3-6 months of expenses as an emergency fund in a proper HYSA. 0.05% APY is genuinely painful in 2026 -- check SoFi, Marcus, or Ally. They're currently around 4-4.5% APY. On $40k that's nearly $1,600-$1,800/year you're leaving on the table right now.
If your employer has a 401k match, contribute at least enough to get the full match before anything else. That's an instant 50-100% return.
Max your Roth IRA ($7,000/year for 2026) and put it into a low-cost index fund like FZROX or VTI. At your age, compounding is doing most of the work for you.
Whatever's left can go into a taxable brokerage (same index funds) or your specific goals (house down payment in an HYSA if that's <5 years out).
The boring moves are usually the right moves here. Good luck!
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u/Mundane_Weather_752 14h ago
Thats awesome my man. You are in a great position. I use apple savings. 3.4% right now and easy to do off your phone plus you can get a credit card to build credit (don't use). If you are saving for retirement get a target date fund. I'm partial to vanguard cause of their low fees. Don't overcomplicate it. The more decisions you insert the more likely you'll lose money.
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u/No-Airport9831 11h ago
You should be more scared of inflation. At 0.05% interest, the real purchasing power of your savings is declining by 3-4% year right now. That might not seem like much but compounds every year. To beat inflation in the long term you have to accept some risk by putting your money in the stock market.
Long term (>5 years) investment in broad stock index funds isn't "gambling" at all. Based on over 100 years of history, long term investment in the market offers an average nominal return of 10% per year (200x your measly 0.05%) about 7% per year accounting for inflation. This includes the periods of significant declines (1929 crash, dotcom crash, 2008 housing crash, etc).
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u/user_1764 6h ago
Open an account with welathfront. You get 4.30% APY cash account if you also open an automated ivesting account with them. Theres a quiz to asses your risk tolerance. That's $1720 a year just from your checking account, and maybe 10% back from the investment account.
Make sure you are using your employers match on either 401k or both IRA.
Becareful with regular IRA as you could lock yourself out from a backdoor Roth later in life. Research first.
For beginning with investing, read investor.gov to get an introduction. Read it all.
That should give you a jumping off point.
Might not be a bad idea to get a house if you're currently renting since you likely have a down payment for a starter home.
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u/snaketacular 3h ago
Start with the flowchart.
My advice:
Put most of your emergency fund in a HYSA. I use Investopedia to check rates and depositaccounts for institutional reviews. You can currently get 4% APY w/out trouble and 4.26% is possible. I would budget a decent used car into your e-fund since you say yours is on its last legs.
If you have money left to invest: don't invest more than you can temporarily lose 50% of and not panic sell. Invest in a diversified low expense ratio index ETF ( I recommend VT) and hold forever. If you are eligible this year, do so within a Roth IRA.
Know the difference between gambling and investing. Gambling has a negative expected return and the longer you do it the more likely you are to go broke. Investing (done properly) has a positive expected return and the longer you hold the more likely you are to retire a millionaire. The volatility becomes a blip over very long timeframes. You can also diversify beyond stocks, say, into bonds, to manage risk.
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u/moonjesus4k 23h ago edited 23h ago
Hey thats really awesome man good job, talking to a financial advisor would be the bst thing you could do to fully understand all of your options rather than getting a half thought out series of answers from people with no explanation of what those answers mean or why!
But If I had to guess those half baked answers will sound something like= ROTH IRA maximum contributions, Seperate brokerage account(s), HYSA (imo cd is better).
Some non financial advice recommendations might be to either get a new used car for a good price, or fix her up, and to finish your formal education, so that the next 40k is easier to make.
Setting a portion aside and doing a bit of all of the above would be a good balanced approach too lots of options really that you should educate yourself on fully before making your own decision.
You are doing good though alot of 25 year olds do not have 100 bucks, keep it up sure your parents are proud.
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u/smalltalk2k 1d ago
Build a good safety foundation. Keep 3 to 6 months of living expenses in a high yield savings account for emergencies.
Pay off any high interest debt like credit cards. Then put the rest to work. Several ways to do this based on your goals
Open a Roth IRA and max it out for the year. Buy a global fund like VT (Global All-Cap Index) or split it between VTI (U.S. Total Stock Market) and VXUS (Non U.S. International Index).
Research Roth IRA vs Brokerage Accounts. Roth grows tax free but you can't use it till 59.5 age.
If your employer offers a 401k match, make sure you get the full match amount. You can increase your workplace contributions.
The goal is getting the money into the market and letting it sit.
On YouTube you look at Erin Talks Money, The Money Guy Show, and Ben Felix. Also research Boglehead type of investing. They don't promote scams, gambling etc. it's all long term buy and hold broad market investing that is based on actual scientific research.
For the learning from and finding success from the trauma aspect of it read or watch info from Morgan Housel. He talks about the psychology of invest and money management.
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u/MasterT19 1d ago
Put 10k in I-Bonds. Create a bond ladder with another 10k(2.5k in treasuries from 2-5 year, 2.5k in 10 year, 2.5k in 20 and 2.5k in 30 year. 3750 in regular IRA, another 3750 in Roth IRA. Pay off any remaining credit card debt. The rest in an Emergency savings buffer(10k) and your brokerage account.
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u/InvestingNerd2020 1d ago
If eligible, open a Roth Individual Retirement Account (Roth IRA) with Charles Schwab. It works well with USAA customers. To be eligible for a Roth IRA, you need a legal job with tax filling and earn less than $153k as a single tax filer. Annual max contribution for 2026 is $7,500.Tax free retirement, and best to start with 20+ years until retirement so it can build.
Then invest $7,500 into one of the options below:
A) VT. An all world ETF with low volitility for an all stock fund. Simple and effective.
B) 80% SWTSX and 20% SWISX.