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20, considering opening a HYSA
I've been looking into different banks. It seems like capital one has the least amount of strings attached. the only problem I have with it right now is that the rate is kind of low at 3% Are there any alternatives with rates above 3.5%? I was looking into…
I've been looking into different banks. It seems like capital one has the least amount of strings attached. the only problem I have with it right now is that the rate is kind of low at 3% Are there any alternatives with rates above 3.5%? I was looking into SoFi but apparently you need to contribute 5k a month or something and I'm unfortunately a broke college student. I have looked into Marcus but idk I'm iffy about it.
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They are all around the same rate because they all follow the same federal rate. The difference is how quickly they change, and how many hoops they make you jump through. 3% is the current standard floor, and chasing slightly higher, on low amounts of money, really does not make a big difference. If you're a broke college student, let's say you have $1000 in a HYSA. Do the math on 3% vs 3.5% over 1 year - it's not much. Go with an established bank with no hoops. CapitalOne is fine.
I'm trying to move out ASAP after graduation so HYSA is the best option for me.
They didn't say it was for an emergency fund. It's a fair question to ask the purpose of opening the account. If it's going to be held in this account for more than a year, it should be invested instead of in a HYSA for better returns. If it's under a year, than a HYSA can make sense. There's different reasons to look at investing vs a HYSA.
Stocks don't seem like a good option rn. I'm trying to move out and build an emergency fund so having a HYSA makes more sense. But yeah honestly I think I might just go with C1.
Agreed - HYSA is the best place for you. There are websites out there that compare HYSA features but honestly, unless there is a signup bonus somewhere, they're all pretty much the same. Pick one and start funding it. You're on your way!!
Money market funds bought inside an investment account function exactly like a HYSA, and will be far more useful to you after graduation with your work retirement investing than a HYSA can ever be. Money market funds are approximately the same risk as a HYSA for you, and the money will be there when you need it.
Chasing the highest rate is a waste of time. Pick one that has benefits that you need. Ally has the “bucket” system. Fidelity CMA acts like a hybrid checking/HYS account, as it comes with a debit card that has unlimited ATM fees reimbursement worldwide.
What you mean “why”? A broke college student is 100% better off having a HYSA that houses their emergency fund, than trying to invest in it. This is indeed the right situation.
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If you have a bank account already, you're probably best off looking at what options they have for your convenience. As forbiddenlake said, the difference between rates is almost certainly small enough to not be worth the hassle.
Don’t think to much and make a hysa ot money market to store 3 to 6 month of expenses then you open a trading account.
Any HYSA is going to give you about the same rate. Marcus is fine; they're part of Goldman Sachs. SoFi is also fine. Ally, etc - also fine. Maybe look for one that gives a sign-up bonus or something. But otherwise - just pick one. :) I see someone else suggested you put the money in the market. It's not a bad idea. It's true that you may get a higher rate of return in the stock market. It's also true that nobody knows the future, and the stock market can go down at any time. Therefore, any money you need within the next 5 years should be in a HYSA. If you want to start saving for retirement, open a Roth IRA and put some $ in that, and invest that in the market... but just understand market money is longer-term money, not money you might need for first/last months rent or whatever. Also check out the Wiki in this sub - lots of great info for you there!
I use the vanguard cash plus acct it’s 3.35% and I jsut randomly throw money into it depending on how much I stick to my budget that month
https://www.reddit.com/r/personalfinance/wiki/banks_and_credit_unions
I always recommend bread savings. They hover in the high 3s
Treasury exchange traded funds (Treasury ETFs). Great for tax protection on your interest earned in high tax states. Examples: California, New York state, New Jersey, and Hawaii. The only downside is lack of availability on weekends. You can get around this with a high credit limit credit card ($5k or more) for weekend emergencies. Some Treasury ETFs: SGOV. 3.57% interest and the most popular. VBIL. 3.59% interest and relatively new (a little over 1 year). Vanguard's jealous response to SGOV.
Go further. Open a real investment account. Put the money in a money market fund. Thats what the bank does with your HYSA money on the back end anyway. Investment account opens up so many more and better options.
Open up a brokerage account with Fidelity. You can just leave the funds in its core money market which will be better than most HYSAs and when you want to invest some of it you can do it all from the brokerage account. You can still pay bills or use an ATM. It is not FDIC insured but that is not a significant drawback
Why are you looking into a HYSA instead of investing it? You could almost certainly get better returns with investing in the S&P500. Nothing wrong with a HYSA in the right situation but they always have mediocre returns.