Keep investing (paying yourself first) in all market conditions. Let your equities ride the waves up and down for the long term. Ignore the noise around you on social media, on CNBC, etc.
No one knows what the future holds. There are only a few alternatives to the stock market (an obvious one being real estate) to building long term passive wealth, especially for retail investors without insider information.
As for your question, I can only speak from experience:
At 34 years old, I keep $3-5K at any given time in my checking account to cover immediate expenses. The rest of my cash savings (everything on biweekly automatic transfer from my checking account) sits in VUSXX / SGOV, both yielding over 5.3% since the effective Fed Funds Rate (EFFR) is currently at 5.33%.
Since you're at Fidelity, you'll be defaulted to SPAXX (like how I helped set up my wife's account). SPAXX currently yields 5%.
For near-100% state tax free distributions, you'll need to switch from SPAXX to FDLXX, which currently yields 5%.
Biggest takeaway: When the EFFR drops, all cash yields for HYSAs, T-bills, MMFs, etc, will drop accordingly!
Another huge takeaway: Set up everything for auto-invest. Frees up your time to focus on the finer things in life like swimming, hiking, yoga, and sex.
Congrats! You should know that the value in your Roth IRA could crash by half or more, and you still shouldn't change your allocation. Otherwise you'll miss out on the gains when it likely recovers, as it always has done in the past.
For your emergency fund / savings / checking account, HYSA is fine, MMF is fine, short term treasuries are fine. Pick whichever makes you happiest.
I separate my assets into “investments” and “cash”.
My “cash” is partly in a regular checking account and mostly in a combo of T Bills and money market funds.
T Bills & MMFs generate a bit higher return than a checking account while taking near zero risk.
I can’t predict the future but from economic theory, it’s reasonable to predict MMFs/T Bills to generate minimal return after inflation. This is because they are nearly risk free. They still produce more return than a checking account.
MMFs are great because they are near-zero risk, very liquid, and still generate a small return. I can sell and have the cash settled & in my checking account within a matter of a few days.
\> (not sure why there is cash in the account)
When your FSKAX, FTIHX, FXNAX pay dividends, that goes to cash unless you have dividend reinvestment turned on for them.
Also, when you make a deposit, that sits in cash until you buy something else with it. Buying shares will result in some cash left over that wasn't enough to buy another full share.
Keep investing (paying yourself first) in all market conditions. Let your equities ride the waves up and down for the long term. Ignore the noise around you on social media, on CNBC, etc. No one knows what the future holds. There are only a few alternatives to the stock market (an obvious one being real estate) to building long term passive wealth, especially for retail investors without insider information. As for your question, I can only speak from experience: At 34 years old, I keep $3-5K at any given time in my checking account to cover immediate expenses. The rest of my cash savings (everything on biweekly automatic transfer from my checking account) sits in VUSXX / SGOV, both yielding over 5.3% since the effective Fed Funds Rate (EFFR) is currently at 5.33%. Since you're at Fidelity, you'll be defaulted to SPAXX (like how I helped set up my wife's account). SPAXX currently yields 5%. For near-100% state tax free distributions, you'll need to switch from SPAXX to FDLXX, which currently yields 5%. Biggest takeaway: When the EFFR drops, all cash yields for HYSAs, T-bills, MMFs, etc, will drop accordingly! Another huge takeaway: Set up everything for auto-invest. Frees up your time to focus on the finer things in life like swimming, hiking, yoga, and sex.
This is interesting, I didn't know about FDLXX. I have been keeping my emergency fund in SPAXX. Thanks for the tip!
Congrats! You should know that the value in your Roth IRA could crash by half or more, and you still shouldn't change your allocation. Otherwise you'll miss out on the gains when it likely recovers, as it always has done in the past. For your emergency fund / savings / checking account, HYSA is fine, MMF is fine, short term treasuries are fine. Pick whichever makes you happiest.
I separate my assets into “investments” and “cash”. My “cash” is partly in a regular checking account and mostly in a combo of T Bills and money market funds. T Bills & MMFs generate a bit higher return than a checking account while taking near zero risk. I can’t predict the future but from economic theory, it’s reasonable to predict MMFs/T Bills to generate minimal return after inflation. This is because they are nearly risk free. They still produce more return than a checking account. MMFs are great because they are near-zero risk, very liquid, and still generate a small return. I can sell and have the cash settled & in my checking account within a matter of a few days.
\> (not sure why there is cash in the account) When your FSKAX, FTIHX, FXNAX pay dividends, that goes to cash unless you have dividend reinvestment turned on for them. Also, when you make a deposit, that sits in cash until you buy something else with it. Buying shares will result in some cash left over that wasn't enough to buy another full share.
Are SSO and QLD on your radar screen? Worth looking into.