Would you keep over $100, 000 in the Bank?

[Savingmonster]

Since money in the bank more than 100k is uninsured and all. That is my goal, in 5 yrs, I want to have atleast $100,000 in the bank. Don't you think that is a great goal to have?

[sweeps]

First, there should be no need to risk going without FDIC insurance. There are several ways around the limit, including spreading your money across multiple banks.

Second, I would argue having $100k in savings is not necessarily a good goal. It depends on what you're saving for. If you have a particular short-term goal in mind for that money (like buying a house), that's fine. But if that money is for long-term savings, then you'll never overcome the effects of taxes and inflation.

[Savingmonster]

Originally Posted by Sweepsplayer

First, there should be no need to risk going without FDIC insurance. There are several ways around the limit, including spreading your money across multiple banks.

Second, I would argue having $100k in savings is not necessarily a good goal. It depends on what you're saving for. If you have a particular short-term goal in mind for that money (like buying a house), that's fine. But if that money is for long-term savings, then you'll never overcome the effects of taxes and inflation.

I am not saving for any goal in particular such as buying a car or a house. Saving 100k in 5 yrs is a goal I have so I have the option to buy/put a down payment on a house, etc if need be. I just feel I will be free financially and have much more options than say, having 2k in the bank or having 3 months of living expenses.

But I was not planning on having it sit there until I am 75 and it's value still being the same, etc.

[poundwise]

At some point between the '3 months of living expenses' and the $100K savings, it would wise to invest rather than just leave tens of thousands in a bank account.

I understand the goal. But unless you specifically need $100K cash in five years, I'd alter the goal to reaching a certain net worth with a certain amount in cash and a certain amount invested.

[Savingmonster]

Originally Posted by poundwise

At some point between the '3 months of living expenses' and the $100K savings, it would wise to invest rather than just leave tens of thousands in a bank account.

I understand the goal. But unless you specifically need $100K cash in five years, I'd alter the goal to reaching a certain net worth with a certain amount in cash and a certain amount invested.

Yes, I understand. Once I reach a certain amount, I will invest in CDs, etc. My original question was silly I know, but it was hypothetical, I don't need it for a specific reason. What I really mean was, "I wanted to be worth 100k + in 5 years", not have 100k in savings. Sorry for the confusion guys.

[boefixepa]

I second poundwise, there are many better means of still having the money around. Many options still exists that are rather liquid. Think of it maybe in the terms of....as I am saving to reach the goal of having 100 K what can I do with the money in the mean time that is safe, but where I can still make my money work for me and exceed the rise of inflation.

[Savingmonster]

Originally Posted by boefixepa

I second poundwise, there are many better means of still having the money around. Many options still exists that are rather liquid. Think of it maybe in the terms of....as I am saving to reach the goal of having 100 K what can I do with the money in the mean time that is safe, but where I can still make my money work for me and exceed the rise of inflation.

Right! that will be the challenge. As I save, I will look into different things. I don't feel comfortable trying to invest if I have less than 15k, thats just me. Once I save 15k (atleast 1 yr's saving), trust me that will be a big goal and give me a lot of confidence & the chance to maneuver. Me, getting to 15k is like me fighting for position in the post (in you are into Basketball). Thats how I am looking at it, once I am in the post I can make some things happen.

this is coming from someone that never believed in the concept of saving NADA. Just Spend spend spend.

[disneysteve]

Originally Posted by Savingmonster

Since money in the bank more than 100k is uninsured and all. That is my goal, in 5 yrs, I want to have atleast $100,000 in the bank. Don't you think that is a great goal to have?

What I really mean was, "I wanted to be worth 100k + in 5 years", not have 100k in savings.

As noted, if you chose to keep over 100K in the bank, you could avoid the insurance problem by splitting the money between 2 or more banks (or, if you are married, titling the accounts differently so they are insured).

And I agree with not keeping 100K in the bank. If you have that kind of money, you should be investing in stocks, mutual funds, etc., not keeping it all in the bank.

Is 100K in 5 years a good goal? I don't know. It depends on your situation and income. Some of that 100K might be in home equity if you purchase a house. Some might be in your emergency fund. Some might be in your retirement account or other investment accounts.

[markio26]

i have over that amount invested in several banks... one is a money market paying 5.05% and is very liquid... the rest are in cd's... we have a 401 k that matches 25%, so, we invest in vanguard wellington, and pimco total bond... we sold our laf stock and made a 30% return this year..

[Broken Arrow]

Well, I think this question has been pretty well-covered, but I just thought I'd add in a few tidbits....

Different accounts can also be individually insured. IRA, checking, saving, and money markets each can have their own 100k coverage. I don't know why anyone would want to keep, say 100k in a checking account for example, but I just thought it'd be interesting to point that out.

For that matter, I wouldn't keep 100k in the bank unless I have a very specific reason to do so, and buying a house in a few years is probably the only one I can think of.

Net worth isn't calculated with simply what's in your savings account. You would also factor in other assets and liabilities as well. For example, even if you have 100k in the bank, but you owe more than that in overall debts, then your net worth is still in the negatives. Just FYI.

And... finally, while Sweeps has already mentioned that liquidity isn't necessarily a good thing if it's being eaten away through inflation and taxes, the same thing can be said with CDs as well. As a short-term, low-risk, low-interest vehicle, you just don't get that much back. I'm just pointing that out because you mentioned about getting CDs later on. They have their uses, but they also have their limitations. What's important is to know what you plan to do with your money and what vehicle will give you the best fit. To reiterate DisneySteve, you'll really should look into diversifying it a bit more in other types of investments.

[Ima saver]

Well I had $200,000 in one local bank and $100,000 in another local bank. They both pay over 4% However, I use that money to pay for land and building materials to build spec houses. So i t makes sense to me and the almost $12,000 in interest is nice.
When i sell this house, I will probably have about $400,000 in the bank. I have decided to put some into the on line banks that pay over 5%. I will still keep quite a bit here locally, but this time I won'd put $200,000 all in one account.
I will have one joint account with $100,000 and one in just my name for $100,000. You can do that and still have fdic insurance on both accounts.

[Savingmonster]

Originally Posted by Ima saver

Well I had $200,000 in one local bank and $100,000 in another local bank. They both pay over 4% However, I use that money to pay for land and building materials to build spec houses. So i t makes sense to me and the almost $12,000 in interest is nice.
When i sell this house, I will probably have about $400,000 in the bank. I have decided to put some into the on line banks that pay over 5%. I will still keep quite a bit here locally, but this time I won'd put $200,000 all in one account.
I will have one joint account with $100,000 and one in just my name for $100,000. You can do that and still have fdic insurance on both accounts.

Wow, all I have to say is, I wish I had your problems

You just went against everything everyone were saying in this post which is funny. But Keeping over 100k in the bank would get me a little nervous even if the chances of losing your money if anything happens are very slim.

[Ima saver]

I think you have a great goal!!I took a chance with the $200,000 in one bank but i don't think I will do that again. However, I did read that you can have $100,000 in a joint account, $100,000 in your name and $100,000 in the name of your spouse and all $300,000 will be insured.
Everyone else is suggesting putting your money into mutual funds to get better returns but this is money i will use this year. I do have over $300,000 in mutual funds and a few stocks, so i am trying to invest.
You sound young, I am sure you can amass $100,000 if 5 years if you really try.!
[Automated by GetSmile]

[disneysteve]

Originally Posted by Ima saver

Everyone else is suggesting putting your money into mutual funds to get better returns but this is money i will use this year.

I agree. If this is money you need to have liquid for a short term purpose, a bank or money market fund is the way to go. Other alternatives are short-term CDs or T-bills (which may offer some tax advantages).

[Savingmonster]

Originally Posted by Ima saver

I think you have a great goal!!I took a chance with the $200,000 in one bank but i don't think I will do that again. However, I did read that you can have $100,000 in a joint account, $100,000 in your name and $100,000 in the name of your spouse and all $300,000 will be insured.
Everyone else is suggesting putting your money into mutual funds to get better returns but this is money i will use this year. I do have over $300,000 in mutual funds and a few stocks, so i am trying to invest.
You sound young, I am sure you can amass $100,000 if 5 years if you really try.!
[Automated by GetSmile]

I sound young? depends on your point of view I guess haha. I am a young saver, an infant when it comes to really saving & being financially focus & dedicated. I am 28 actually, just turned 28.

I am just trying to learn as much as possible and so far, this site have helped tremendously. There's are a lot of Knowledgeable people here. Reading the boards on this site have been very positive for me.

Like I said, I aim for 100k because I it will give me a great deal of financial freedom. This goal sounds out of reach, but I set my standards a little bit higher for motivation purposes.

Again, I don't plan on having everything in savings.

[Ima saver]

28 is young to me, I didn't learn anything about investing until I was in my 40's. I also have never earned more than minimum wage, so if i can do it , you can too. Here is to your first $100,000, I know I was excited when I hit it!!

[Savingmonster]

Originally Posted by Ima saver

28 is young to me, I didn't learn anything about investing until I was in my 40's. I also have never earned more than minimum wage, so if i can do it , you can too. Here is to your first $100,000, I know I was excited when I hit it!!

Thanks for the vote of confidence man.

[Broken Arrow]

Ima is female.

[Ima saver]

Thanks, broken arrow!! [Automated by GetSmile]

[boefixepa]

I think he means 'man' in the general nutrual slang terms thingy. I could be wrong, but that's how I read it.

I do get a kick out of all the little nuances of these treads and not 'really' knowing who you are talking to....kinda makes it fun.

KEEP UP THE SAVING!! It's slow sometimes but you get there.