Why $50K in Savings Is Probably Too Much
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Congratulations, you've saved up tens of thousands of dollars in your savings account. Now it's time to ask: Is there a better place to put some of that cash?
Sure -- having, say, $50,000 in the bank definitely isn't a bad thing. But the truth is that some (or even most) of that money is better off elsewhere.
Once you've established an emergency fund of around three to six months' worth of expenses, investing additional savings is the way to go. Here are three easy places to start.
Earn more on your extra savings today
There are tons of simple, easy ways to invest and earn more on your excess cash. Here are three of my favorites.
1. Certificates of deposit (CDs)
CDs let you lock up your money for a given period of months or even years, in exchange for a fixed return. And because interest rates are on the decline, now's a great time to lock in a high APY while you still can. See what the best CD rates are looking like today to get started.
2. Individual retirement accounts (IRAs)
IRAs are a savings tool with powerful tax advantages -- they're exempt from capital gains and dividends taxes, which can mean tons of savings in the long run. Plus, anyone with an income can open one and start saving for retirement today. Check out our list of the best IRAs today to start saving for your future.
3. Brokerage accounts
Brokerage accounts also let you invest in stocks, bonds, mutual funds, and more. They don't offer the tax breaks of an IRA, but they have fewer limitations (anyone can open one). I recommend starting with simple index funds for a "set it and forget it" way to grow your money. To get started, see our list of our favorite brokerage accounts today.
For a medium-term investment with a guaranteed return, CDs are worth a look. And for long-term investments with strong growth potential, IRAs and brokerage accounts are the perfect starting point.
Should you keep more in your savings account?
Sometimes holding on to more cash is a smart idea. If you're saving up for an upcoming purchase or medical expense, for example, keeping more cash on hand might make sense.
But if you've got $50,000 in the bank "just because," that money could be working harder for you elsewhere.
Also: For the cash you do want easy access to, make sure you're keeping it in a high-yield savings account (HYSA). Right now, the best HYSAs are offering APYs of 4.00% or higher, making them the perfect place for short-term savings. And just like traditional savings accounts, your money's FDIC-insured up to $250,000, so you're always protected.
Want to earn more on your savings today? See 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.