Navyman72

I have a random question me and my friends were going back and forth about is 50k in a saving account alot of money? I think so! They on the other hand said it's not. I guess it's all subjective but I wanted to get AZ members thought on it. IS 50K ALOT OF MONEY????

horseshoez

iTrader: (2)

It depends...

If you're 23 years old, then $50,000 is quite a bit and works out to a very nice start; however, if you're like me and in your early 60s, it ain't a drop in the friggin' bucket.

FWIW, my son is currently on deployment, he left MCAS Iwakuni today for Austrialia and will be back at NAF Misawa in a month or so. He is a wizzbang-crack wrench on the GE-414 engine in the Super Hornets.

thoiboi

Depends on your age.

justnspace

iTrader: (1)

I have about that saved. and I still feel SUPER poor.

Navyman72

Your sons a marine horseshoes? If u go to Australia trust me it's not a deployment that's good life there. Naw but I pray he stays safe with NK over here shooting misses our bases are on high alert so I pray he stays safe. Now to the money I think 50k is a lot if your car is paid off, and let's say u have a mortgage and you lost your job for 6 months u should be ok I would think. As long as u don't have a 750k house. No agrees?

horseshoez

iTrader: (2)

Funny thing, my wife and I were sitting high on the hog back in the mid 2000s, with more than enough salted away for a very-very comfortable retirement. Then we both lost our jobs due to the economy; I found one at half my previous salary relatively quickly, but she ended up starting her own business. Yeesh, we would have been better off if she'd just stayed unemployed. That business literally ate through our entire life savings, and all of the equity in our house in just over two years.

Imagine starting over in your late f50s not only with zero saved, but a mountain of debt to pay off; a mountain "six-figures" high no less. We're relatively comfortable now, but still have one kid in college so only a nominal amount going into savings for the moment. I figure we won't be able to start saving in earnest for retirement for two more year or so, and then, even with salting half our income away we'll still be working until our early to mid 70s.

Good thing working keeps us young.

Navyman72

u still feel poor? Where do u stay? Even in California I think that's a decent savings! just my opinion though

Navyman72

Yea I get what u mean now that u say that

justnspace

iTrader: (1)

right, probably the only fallacy in your post.
Everyone is in a different position and you cant really compare to any one else.

I wanted to buy a house with 20% down payment. that would EAT ALL of my savings, thus why I feel poor.
I was Furloughed a couple months ago, luckily was hired back...but that put things into perspective. If I lose the job again, bye bye house fund.

Navyman72

i hear u if your're 30 with 50k it's a big difference between be 60

Navyman72

well since u put it like that, u make a very hard case to argue. I see what u mean

horseshoez

iTrader: (2)

No, I was a Marine back in the 1970s, my son is an AD2 in the Navy. His deployment started in April with a hop from Whidbey Island to NAF Misawa, then six weeks over at Osan Air Base in Korea, six weeks back in Japan at MCAS Iwakuni, six weeks in Australia (I'll know tomorrow which base) where they're going to be in full lock down and on high alert. Finally they're going back to NAF Misawa before shipping back to Whidbey Island in September or October.

Of course all of the above is dependent upon what Fat Boy decides to do.

As a side note, when he was bidding for orders a couple of years back, he put in to be a Rotary Wing Mech at NAF Atsugi; he was kind of bummed out he wasn't selected for those orders.

Navyman72

Well thank u for your service, u make it possible for me to do what I do today. So thank u! And I was stationed in WA my first command Everett though and I went to Sidney island for shipboard Firefighter training. ITS SOOOOOOO COLD IN WIDBEY. But nice and from my knowledge all of our squadrons are going to iwakuni (makes me happy) and I hope fat boy doesn't send Us to mess with NK we have enough on our plates but if he does we'll be ready. And the Atsugi base is ok, it has a real small town feel about it so depending on where your're from u may like it or may not. But I leave here in feb and on my way to SD to my next command so Japan was nice but there's nothin like the good ol USA.

AZuser

Depends on how you look at things.

Is it a lot of money? Yes, when compared to what a majority of American have saved up.

Most Americans have less than $1,000 in savings - MarketWatch


On the other hand, if you're planning for retirement, "50k in a saving account" is not a lot for someone who's 35 unless you're excluding what you also have in an IRA, 401k, etc.


Don't know how much you make a year, but a rule you can follow is:

• By 30: Have the equivalent of your salary saved
• By 40: Have three times your salary saved
• By 50: Have six times your salary saved
• By 60: Have eight times your salary saved
• By 67: Have 10 times your salary saved

This means at your current age of 35, if you're making around $50K a year, then you're slightly behind with just "50k in a saving account"

NSXNEXT

iTrader: (2)

Define "Savings"
1) Liquid assets? - savings accounts, non-retirement accounts
2) Retirement? - can't touch

It's all relative to age, other investment assets + debt
It's all about having a balanced portfolio. Proper mix of liquid vs. non-liquid (true retirement) assets and minimal debt

Navyman72

Wow those facts are mind blowing! Before I joined the military I was one of those people that had less than a 1k in the bank I was living check to check until somebody sat me down my wife actually thanks to her and we started saving totogether. But I can understand how a lot of people don't have it. But I think we are not taught saving at a young age. And that's where the problem is.

Navyman72

no I mean 50k nestled in your account to use if need be i.e (lose of job,random hospital visit, family emergency) that's sort.

horseshoez

iTrader: (2)

I guess it's all relative. My son, born at 72nd and York in NYC, did most of his growing up here in New Hampshire and managed to become a certified Snowboard instructor by the age of 17, so cold is what he likes. Of course, one is stationed "for the good of the Navy" wherever they darn well think you should be stationed, and Mr. Murphy was definitely present and accounted for when he got his first round of orders out of Pensacola; NAS Lemoore. I visited him there three times; there wasn't a single day where there wasn't an air quality alert posted, the base is surrounded by cattle feed lots and smells of cow dung 24x7, and the I-Level maintenance shops where he worked weren't air conditioned, so when the OAT was 110°F in the shade, it was a fair bit hotter in the shops.

Long story short, he was thrilled to be posted to Whidbey Island and was more than happy to work out on the flightline in December and January this year when most of his peers were hiding inside. If you recall the "canopy incident" which happened December last, the incident which grounded all Super Hornets world-wide, he was the plane captain on that plane and needless to say, spent a lot of time with the investigators after the event when they were trying to figure out what happened. In the final analysis, "Cold happened" (it's more detailed than that, but you get the idea).

Navyman72

Yea I know it's always more going on than what read or see on the news

Dan

No. It will pay for one of my vacations with about 10-15K left over.

doopstr

50k in a savings account is a lot of money because it's just sitting there becoming worth less every year. It should be doing something better than rotting away.

Navyman72

Doopstr I agree but isn't about that time for the stock market to take a dive I was reading somewhere that it happens every 10-12 years like clockwork. I've been watchin Amazon and google climb though. Makes me anxious

doopstr

I have no idea where the top is. You can hedge against that by dollar cost averaging in. $2k a month over 25 months.

Dan

Yes that! But 40+ years.

thisaznboi88

iTrader: (7)

Depends on your definition of a lot, where you live, monthly expense and etc

nfnsquared

To date, the market has fully recovered from every crash/correction on record. The recovery from 2008 took the longest (~2.5 years).

OP, you're 35 now. $50K easily could be $400K (and likely closer to $600K) by the time you're 65 if you dumped it into a quality S&P500 index fund now and just let it ride.

This is the other option. DCA until/if the market crashes again, then get in with the remaining lump sum and ride it.

Either way, if you're patient and willing to ride out the corrections, the broad market will reward you with an average of 8%-10%/year. Over time, that will grow $50K very nicely.

wackjum

You can never save too much money. But if it is sitting in a savings account earning practically zero interest, it could be better applied elsewhere.

The most you should keep in a liquid account should be 3-6 months of expenses + whatever you might be saving up for (vacation, house down-payment, car, etc).

The rest should be made to work for you. The "safest" way and what most financial advisers will tell you to do is to put it into various financial instruments like mutual funds, etc. There is nothing particularly wrong with this approach, but it is not the only approach. You can invest in a business or real-estate as well. There is more risk involved, but also potentially more gains.

Basically there are two ways to increase your income. The first is to make your time more valuable. This means getting a raise, applying for a new job, or getting degrees and certifications that allow for better jobs.

The second way to increase your income is to set up parallel income streams. For example a rental property generates income while you are at your job also generating income. A second rental property opens up a total of 3 streams of income.

Money saved can potentially become parallel streams. This can be through investments in the financial market, but it can also be revenue generating real assets, etc. So in that sense, money sitting in a bank is not money well utilized. But $50k in savings is a great position to be in.

Navyman72

Nfnsquared and wackjum yall both make very very good points. I agree with both of y'all

nfnsquared

Get on it!!

https://www.fool.com/investing/gener...there-bet.aspx

With a Vanguard account, you park cash in a money market account (in fact, they require this) and then move any or all of it into any Vanguard fund/s you desire whenever you desire.

oo7spy

For a 35 year old capable staying in the work force, $50K in the bank (not an IRA, 401K, home equity, etc.) seems like a very healthy savings account. "A lot" is too subjective and could mean "more than enough" to some people. The idea of 3-6 months' expenses in savings seems like a good idea. You should be able to get back on your feet in that amount of time if everything were to go down all at once.

horseshoez

iTrader: (2)

Not that I'm necessarily advocating this option but...

There are some who advocate keeping true liquid savings to a relative minimum (as in two months of expenses or so), and dumping as much as possible into a well managed 401K (assuming the individual has one available). In this way you maximize your "savings" by investing with pre-tax income (granted, taxes will need to be paid come retirement time).

What about an emergency period of unemployment or other unusually high expense? Should one occur, those who advocate the above savings plan suggest you borrow against the 401K.

Once again, just relaying a course of action some advocate, so don't kill the messenger here.

oo7spy

I didn't see anyone proposing a funnel into a 401K. I think there are numerous investment opportunities that you can retrieve your money in a timely manner. 6-12 month CDs come to mind.

In certain circumstances it should be plausible to get a loan with temporary 0% interest like a credit card with an introductory APR. That should buy you some time to recover.

Navyman72

CD don't pay that much

AZuser

True. But if it's just sitting in a regular savings account, the interest is probably less than a CD.

11 month no penalty CD gets you 1.5% with $25K minimum deposit

https://www.ally.com/bank/no-penalty-cd/

Saintor

1.5% is barely inflation. Hardly investing.

I now invest only in equities/dividends. Yes risky, but not really more like if I had a business and all my money in it. Very important IMO to keep that Roth IRA full ((TFSA in Canada)

If I was 35 again and suddenly 50K available, I would treat myself for half of it and the rest for building more asset (retirement fund or real estate). At my age, it would go all in retirement.

nfnsquared

The historic average inflation rate is 3.18%. If you want to see how brutal inflation is on your savings, run your projected savings through this calculator. It's pretty sobering and fully supports the mantra "save early, save often":

Retirement Income Calculator

doopstr

At age 61 this might be fine for you since you could just start taking distributions. But for folks under 55 I don't think it's a great idea.

401k loans are only possible if you are employed. If you get laid off/quit and you have a loan out on your 401k you need to pay it off in a relatively short time (maybe as short as a month) or it will be considered a distribution and you will pay taxes/penalties. Check your plan documentation for details.

It is probably okay to have your emergency fund in a regular taxable trading account. While there is risk of principal loss it is still a liquid investment.

I keep enough cash in a savings account so that I don't need to worry about an unexpected bill and that I don't have the feeling of living paycheck to paycheck. Other than that, my six months is in a trading account in reasonable investments.

horseshoez

iTrader: (2)

Like I wrote above, I am not necessarily advocating this course of action, nor am I saying I follow it myself; just saying *some* folks make the argument to dump virtually all non-essential income into a 401K.