2 Big Reasons I'm Putting More Money Into My Brokerage Account

The reasons may surprise you.

Recently, I have been depositing more money into my brokerage account. I've decided to do this in order to invest more in the stock market. 

There are two big reasons why I made the decision to devote more of my cash to investing rather than toward accomplishing other financial goals or depositing my money into a savings account. Here's what they are. 

1. Inflation means savings accounts are losing value

One of the most important reasons why I am redirecting more of my spare money into my brokerage account is because inflation is so high right now. In May, the consumer price index jumped 8.6% from a year earlier. That’s the largest increase in the cost of goods and services in decades. 

Meanwhile, my high-yield savings account is paying out just 0.75% APY. This means that all of the money I have in savings is sitting there losing a substantial amount of value. 

Now, I know that I still need some money in a savings account because I want to have liquid cash that's accessible when I need it. This could be especially important for emergencies. And I also know I don't want to invest money I could need very soon since I wouldn't be able to wait out downturns, so I'm still keeping some funds in savings that I've set aside for short-term goals. 

But, I'm not putting any more than necessary into a savings account because I want to minimize the erosion of buying power that's occurring. Since I already have a fully-funded emergency fund and don't have many short-term goals I"m working to accomplish right now, most of my spare money is being directed into my brokerage account where I can invest it and hopefully earn higher returns to help me fight the effects of inflation. 

2. Market downturns present buying opportunities 

Another reason why I am putting more money into my brokerage account is that the stock market has been volatile lately and I believe a more prolonged downturn may be coming due to current economic conditions.

When a downturn occurs, I view this as a buying opportunity because the stock price of high-quality companies tends to go down not because those companies are worth any less, but because they become casualties of the market crash. This presents a great buying opportunity to get shares at discounted prices. 

I want to have as much cash on hand in my brokerage account as possible so I can take advantage of these buying opportunities and set myself up to potentially earn much higher returns in the future. While I know it's impossible to predict exactly when a downturn will occur or when stock prices will bottom, I still believe preparing for a crash by getting ready to invest more is a good strategy. 

For both of these reasons, I'm putting much more money into my brokerage account and less into savings. Hopefully, this will end up paying off for me in the end. I think it will, because I know my current savings level is sufficient and that investing as much as possible over the long term should help me grow my wealth over time.