Submitted by random_curiosity_guy t3_zyezad in personalfinance
I know there are the flowcharts showing the best ways to maximize your savings, but outside of that, what’s a good reference point to save (i.e. HYSA, I Bonds, MMF) vs invest in a brokerage account (i.e stocks, ETFs, mutual funds, etc.).
Assuming that you made it through the flow chart and you’re left with a certain amount of cash that can be put to use, what is the best reference point of how to divide it up? Or at any point what portion of your assets should be investments vs cash?
For context: I’m 25-30, HCL, don’t have a family to support and don’t have any anticipated major purchases in the near future (1-2 years) that I need to be saving for. My investing strategy is I usually just buy index ETFs and hold (historically invested in MFs but they cost a lot and were underperforming).
I get overly concerned about finances and worry that I’m not doing everything I can to ensure financial freedom down the line.
Any advice?? TIA
TyrconnellFL t1_j25l1oa wrote
There is no ratio. That's the wrong approach. Rather than a ratio, have what you need in savings left in savings and invest the rest.
You need an emergency fund in savings and you need any money you're saving for some next-five-years purpose in savings or similar.
Your investments may change with age as you approach retirement into something with less risk, like bonds/treasuries. In your late twenties I think that's too conservative.