Author Topic: Balancing act- easy access to cash vs. accumulating interest/investing  (Read 1069 times)

ElTopo

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Hi guys, new here! I have been lurking here for a while but am finally ready to post. I'm in my late 30's and am finally ready to get my financial situation in order (better late than never). I will explain my situation here briefly and would appreciate any suggestions.

I am single, no children, no debt of any kind, and have ≈ $70k saved in the bank (savings and CD's). I realize having money in savings vs. invested or somewhere else where it can accumulate more interest is really bad. I live in San Francisco (I know) but have rent control so my rent is actually quite affordable. I have always been good at not spending above my means- I live a very minimalist lifestyle and am definitely not a consumer. My problem has always been income- I majored in English in college so I have never been able to land any kind of high (or decent) paying job. I currently make under $50k per year, and with my spending habits can put about 1/3rd of that into savings.

My main issue is this- I am worried about both my living situation and job situation. Living situation because I know my landlord would love to get rid of me so the rent could be drastically increased, and job situation because the company I work for is not doing well. If I would lose my apartment, or my job for that matter, I would be forced to move from SF since I could no longer afford to live here.

Because of this, I am paranoid about having quick access to as much money as possible. I have been hesitant to open an index fund or whatever partially because I have never been the type of person to put money first, and second because I worry I might need to move and start over, which could take months of living off of savings before having an apartment and a new job.

So my questions are 1) how should I balance my money, in that I have quick access to what I feel I may need and the rest is accumulating as much interest as possible? and 2) starting out with all of this, what is the simplest way to get investing/accumulating more money from what I've already saved- index funds?

Thanks so much for any help.





terran

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  • Posts: 2011
Given your precarious situation you are probably wise to keep a larger emergency fund than might otherwise be recommended. Given your industry and skill set how long do you think it would take you find another job? Would the new job cover relocation expenses? Could you find a lower paying job (retail, barista, etc) on short notice that would cover your basic expenses? How low could you cut your expenses if you needed to? What unemployment benefits would you be eligible for? Those are the questions I would be asking myself, then decide how many months worth of basic living expenses you would feel comfortable having. Anything more than that you can consider investing.

ElTopo

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Thanks for the reply. I suppose 3-6 months is the standard to prepare for just in case? I guess I'm being overly cautious by waiting and letting that sum just sit there. It's time to do some research. Thanks again!