$50K in the Bank? Here's When It's Too Much -- and What to Do Instead
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Having $50,000 or more in the bank might feel like an achievement -- and it is. There's no such thing as having too much financial security.
But the truth is, keeping tens of thousands in a standard savings account is probably a missed opportunity. It's a safe move, sure -- but some (or even most) of that money could be earning a lot more elsewhere.
Once you've built up an emergency fund -- three to six months' worth of expenses -- there are better places for your cash. Here are three great spots to look.
Three great places to put excess cash
1. Certificates of deposit (CDs)
CDs are a savings product with a simple proposition: Lock up your money for a given period of time in exchange for a guaranteed return. For example, you might put $10,000 in a 1-year CD that earns 4.00% APY and earn $400 in interest for your trouble.
And with interest rates on the decline, now's the perfect time to lock in a high APY before it's too late. Take a look at the best CD rates still available today to get started.
2. Individual retirement accounts (IRAs)
Looking for a simple path to long-term security? IRAs are a great place to look.
IRAs are available to anyone with an income, and let you invest and save for retirement with a few powerful tax advantages. They're exempt from capital gains and dividends taxes, which can mean long-term savings in the five or six figures. Plus, anyone with an income can open one. See our list of the best IRAs today to start saving for your future.
3. Brokerage accounts
Finally, brokerage accounts are another great way to start investing if you aren't already.
Brokerage accounts don't offer the same tax breaks of IRAs, but they also have fewer limitations -- any adult can open one. If you're looking for straightforward, steady growth, I recommend index funds as a "set it and forget it" way to invest. To get started, see our list of our favorite brokerage accounts today.
When to keep more cash on hand
An emergency fund of three to six months' worth of expenses is enough for most people. That's your money to cover you in the event of job loss, medical emergency, stuff like that.
But there are a few good reasons to keep more cash on hand. If you're planning a big purchase, like a down payment on a home, for example, keeping lots of money in savings makes sense. Or if you have health concerns, unstable income, or work in a volatile industry.
Other than that, though, keeping $50,000 or more in a standard savings account is probably a missed opportunity.
And for the cash you do keep in the bank, you'll want to make sure you're earning in a high-yield savings account (HYSA). Right now, top HYSAs are offering APYs of 4.00% or higher, making them the perfect place to keep short-term savings you want instant access to.
Ready to earn more on your savings today? Check out our full list of the best high-yield savings accounts available now.
Our Research Expert
Ryan Wilcox is a full-time Personal Finance Writer at Motley Fool Money, covering credit cards, bank accounts, investing, auto insurance, and other personal finance topics. Ryan has been writing about credit cards and savings since 2022. Before joining Motley Fool Money, he was a full-time writer at The Points Guy, where he focused on maximizing credit card rewards and travel strategies. He holds a bachelor’s degree in English and American History from the University of North Carolina at Chapel Hill, where he also spent four years reporting for The Daily Tar Heel. With a background in both journalism and consumer finance, he brings a clear and thoughtful voice to money topics. Outside of work, Ryan is likely reading, writing, or updating his Letterboxd account.