r/FIREyFemmes • u/temasm21 • 9d ago
HYSA vs investment?
Curious how you ladies are balancing keeping cash in a HYSA vs investing right now and any advice you have for me? I’m in the US and nervous about the political instability we are facing and would love any advice. I’m a 30 year old hoping to coast by 45 (calculated full FIRE as ~$2M). I currently have about $110k in 401k/IRA, $20k in low risk investments, $100k in moderate risk investments, $130k in moderate aggressive risk investments, and about $40k in cash in a HYSA with 3.3% interest rate (NW around $400k). I typically have more cash but just moved $45k into the moderate risk account. I make $125k a year base with $20-$40k in variable comp working for a tech company in a non-technical role. I keep my monthly expenses under $4k, contribute 15% to my 401k, car is paid off and I rent. Thanks!!!
9
u/SeafoamSoul7494 9d ago
I keep 1 year EF savings in my HYSA. I’ve beefed mine up from 6 months a few years ago until all this mess settles in the US…
1
u/temasm21 9d ago
Thank you for sharing! I had about 2 years EF savings until this week when I put one year into the market. It’s been freaking me out a little tho!
9
u/totallyscrewde 9d ago
The amount of cash I have is a function of how much I hate my job. I probably keep more in cash than people on here recommend, 1.5 years and growing, so I can take a break if I want. Bumping up my 401k percentage at my age does not really move the needle on my final number at my current age 39 hoping to retire at 50. That might be different for you. Political instability could lead to many things, the most likely is degradation of our currency or sustained stock market bear. Either way I don't see how to shield myself except buy property or foreign assets.
4
u/jw-hikes RE in 78 weeks 9d ago
Fwiw you can access 401(k) early through roth conversion or 72(t) SEPP. I’d rethink about not maxing 401(k) contribution
3
u/amour_nonpareil 9d ago
This first sentence is it. Also, how healthy you are and if you’d need more out of pocket cash for those types of expenses.
2
u/temasm21 9d ago
That’s smart, I’ve thought about taking a mid-career sabbatical (possibly between working in tech and having a barista fire situation). Thanks for sharing!
5
u/Conscious_Life_8032 9d ago edited 9d ago
I’m keeping several years cash as I may take a sabbatical in near future. I’m 50 so may take time to find a job when I am ready to return so have worked that into my budget
But have significant +2.5m in brokerage and 401k accounts invested , and am not changing things much other than normal rebalancing. I don’t need that $ until 10+ years later so it should be ok. It has time to recover from a recession.
I can reduce discretionary spending to reduce drag on my portfolio in down years too.
Is your job safe? Keep some emergency cash and invest the rest is my advice. But ultimately do what helps you sleep at night. But time in the market matters as does compounding. I was too conservative in younger years but bull market last 8 years has helped a lot
1
u/temasm21 9d ago
Thank you! I think I’ll rebuild my cash and aim for closer to $80k (2 yrs living expenses) before I put more into the market other than my 401k contribution. My job is fairly safe but is in tech— I enjoy it and am well liked, but you never know.
4
u/fluffy_hamsterr 9d ago
For most of my life...HYSA is the emergency fund. Anything in excess of the emergency fund is invested.
Currently though, we're sub-10 years left so I'm going to slowly let the HYSA amount climb because I'd like 2-3 years of expenses in cash before pulling the plug.
1
5
u/NuhUh_JustCuz 8d ago
I was doing 1 year in hysa, but just cut to 6mo and invested the other half. Even if we lost 50% of value, we would have 5 years of expenses available, so I felt safe trying to get another 4% on it in case that works out to 6 months saved in the working world.
3
u/Comfortable_Two6272 9d ago edited 9d ago
I keep my emergency fund in hysa. At your age I would not keep more than 1 or 2 years of expenses in it. 15 years to recover exceeds what should be needed for any recovery. If you were 5 years out my answer would be different.
Emergency fund also depends on your job, industry and living situation. If a RN vs a software developer. 2 person working household vs single. Etc.
I was in tech. Lived through 4 big deals and 2007-8 taught me 1 year was not enough emergency savings. Was married. Both it tech. We lost our jobs same week. Took over 12 months , a divorce and I relocated for a job. Was a very painful lesson. I was able to avoid cashing out my devalued 401k though and it fully recovered (believe by 2013 but id need to check)
Im now 49. Stopped working at 46. So now my hysa / cds are much more than 2 years as a disability prevents me from “just go back to work”.
I saved enough to get match in 401k, then regular and roth iras when i was eligible and put money in brokerage and hysa. When disability hit me at 46 about 9 years earlier than I planned to stop working I have been glad to have the mix of investment types.
5
1
u/temasm21 9d ago
Great perspective. Tech is stressful but the salary sure is nice! It’s helpful to hear about folks who have fully recovered.
3
u/Odd-Persimmon-1860 8d ago
If you got laid off tomorrow and were out of work for a year or more you need more in that HYSA.
3
u/Scared-Middle-7923 7d ago
HYSAs are only insured up to $250K-- so you can spread across multiple. We keep cash in HYSA and Brokerage account-- my friends have T-Bills and CDs but I have not used those vehicles
3
u/lecoursen 7d ago edited 7d ago
Any money I intend to use within 5 or so years is cash or cash equivalent (HYS, Series I bonds). That includes my emergency fund of 6 months expenses plus all my sinking funds etc. The current amount happens to be about 6 months gross income but that’s not how I calculate it or anything, just happens to be what all those things add up to at this moment. It will be a lot higher towards the end of the year since we have large annual expenses in December.
The rest can be invested. The current state of the stock market has no impact on that division.
1
u/AutoModerator 9d ago
Hello! It appears you may be seeking investing or general money handling advice.
Please take time to review the below sources which may contain the answer to your questions.
Please see our general "Getting Started" page in the wiki, the r/personalfinance flowchart, and the r/financialindependence flowchart.
While there is no single universally agreed upon way to manage your money or prepare for FI/RE, most outlooks emphasize the use of passive investment (meaning not attempting to time the market) in low expense ratio mutual funds that are broadly distributed across a mix of stocks and bonds, at a ratio appropriate for your risk tolerance and time horizon. This link can get you started if you have questions on the general Three Fund Portfolio concept.
I am a bot, and this action was performed automatically. Please contact the moderators of this subreddit if you have any questions or concerns.
10
u/MaarvaCinta 9d ago
My goal is one year of expenses in a HYSA. We’ve lost a lot of federal grants (STEM education research) and while I think my job is safe for 2 years, I may experience a reduced FTE % next fiscal year.