Do you keep money in a bank savings account?

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amother

Thu, Aug 11 2022, 12:03 pm

Or are there reasons not to do this?
What do I need to know before putting aside money in such an account?
(I'm in Israel but I don't know if that changes anything)

amother

Peach

Thu, Aug 11 2022, 1:21 pm

Really depends what you are saving for. If it's long term saving, it's kind of a waste--it can gain much better interest other places.
We have some money in a bank savings account. It's our emergency money (emergency car repairs, etc).

Amarante

Thu, Aug 11 2022, 1:32 pm

It really depends.

I have a savings account at a local bank. I think I originally opened it because it enabled me to link with checking and so checking was free. I still have some money saved there and depending on how you handle finances, it is convenient to have cash that can be accessed immediately if you need it.

However, interest rates are fairly low so the amount you keep in a simple savings account really depends on what your other assets are and how you use the account. For example, prudent financial advisors tell people to have six months of living expenses in a safe accessible liquid account - for most people that would be a simple savings bank.

However once you have that amount saved, there are other places to put your money which act as investments but are for long range parking of money.

amother

Coral

Thu, Aug 11 2022, 1:41 pm

Yes, but only to hold investment money temporarily until we decide where to invest.

amother

Petunia

Thu, Aug 11 2022, 1:43 pm

No, we invest savings.

zaq

Thu, Aug 11 2022, 1:48 pm

Experts recommend having an emergency fund of 3-6 months living expenses in a highly liquid account such as a savings account. Beyond that you're better off with more lucrative investments, which are usually less liquid.

amother

Thu, Aug 11 2022, 3:06 pm

Thanks for all your replies.
But does investing mean there's a risk of losing money or are there safe and effective ways to do this?

BrachaVHatzlocha

Thu, Aug 11 2022, 3:49 pm

Interesting question! I recently put some money in a CD. So instead of the .01% interest I was earning in my savings account, I can get like 2.65% and have it there for 18 months. There are no risks, as far as I know, with a CD. And if you need the money before the term is up, you lose a few months interest, I Believe.
Would like to hear other , better interest, options

Amarante

Thu, Aug 11 2022, 4:09 pm

amother [ OP ] wrote:

Thanks for all your replies.
But does investing mean there's a risk of losing money or are there safe and effective ways to do this?

There is no yes or no question.

Anything other than an FDIC insured deposit in a bank - either account or CD carries a risk that it will be lower in value if you need to sell it.

Investments are intended for people who are going to keep their money in that investment vehicle for a long period of time so that they don't have to sell when the market is low. Over the long term the return on an investment (not bank account) will be higher than the low interest you would have earned at that bank.

That is the reason why you keep six months of living expenses in a bank account or other place where it will not decline in value in the event you need to liquidate or withdraw the money.

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