Savings accounts pay a pittance these days.

It's tempting to take any extra money you have and invest it for higher returns.

But should you?

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Okay - interest rates on savings accounts have never been lower.

You're a smart person, and you want to get a RETURN on your money.

Good for you, but let's talk about the best way to win long term, through the ups AND the downs.
No one knows when stocks will drop. If anyone tells you otherwise, they are either delusional or they are lying.

Properly diversified quality assets will (almost) certainly rise in the long term.

But they could drop 50% or more in the short term.
So here's what you should do.

First, if you have 401(k) or similar account with a company match available to you, invest to get the match.

Second, put money you expect to need within the next 2 years into a high yield savings accounts.
This includes an emergency fund to cover:

1) job loss
2) major expenses

Car maintenance? Home maintenance?

It is not a question of IF you'll need it. It's a question of WHEN.
Build your emergency fund to a point you are comfortable with.

1 month of expenses is a minimum. 3-6 months of expenses is recommended.
Is there anything else you definitely plan to buy within the next two years?

A car? Down-payment on a house?

Keep that money in a high yield savings account, too.

After you've funded your emergency fund + your big expenses for the next two years?

This is the fun part:

*Invest your extra money as soon as you have it.*

Don't worry about current stock values. If the future looks anything like the past, the value will rise over time.
The market WILL fluctuate in the short term.

But guess what?

You won't have to worry about that. You'll have plenty of money available in cash.

You'll get to HOLD your investments during the ups and the downs.
You get to WIN because you won't have to pull your investments out until you need them.

(Hint: you won't need them until a long time from now.)
Executive Summary:

Money you might need in the next two years?

*Put it in a savings account.*

Extra money beyond that?

*Invest it as soon as you have it. Don't pull it out until you need it.*
Like what you read? *Share the first tweet.*

Have any questions about money? *Shoot me a DM.*

(This thread was inspired by an excellent question from someone here on Twitter - someone just like you.)
You can follow @ChrisB_Finance.
Tip: mention @twtextapp on a Twitter thread with the keyword “unroll” to get a link to it.

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