Should I keep cash for future expenses or should I invest it all now?

[Anonymous]

I want to ask any experienced investors what they think is the best way to handle my money.

I'm going to make up numbers just for an example.

I have $10,000 amount in an investment fund right now.

I have $10,000 in savings and $10,000 in savings as an emergency account. I am also saving for a potential down payment on a house in the future, but that could be 2 or 3 years away.

I Don't need this money for bills or expenses at this time.

The debate I'm having with myself is if I should keep the money in my account as is, or if I should move the $10,000 or possibly all $20,000 to my investments. Is it better to have the money "on hand" or should I invest the money with the possibility to withdraw it in the next few years?

[jennifer_bloom]

I know a guy who died and I believe it was a suicide and I learned through his friend weeks or months later that he invested a lot of money in mutual funds and lost almost all of it during the pandemic of 2020. He knew he was poor but thought that would change and then all his hard work was reversed. I did research on investment banking laws cause my friends husband works as a high position person in one and I thought I might get free advice or discount service and they said you had to have either very high annual income or very high personal net worth to legally invest in a hedge fund because there is a possibility you could lose everything. I know a guy with an IQ over 160 that lost 2 million when the economy was good. Bad luck effects everyone. The only way to money is hard work.

[Asker]

Lol. Investing isn't a get rich quick plan.

[AviatorTom]

You should always have some liquid assets that you can quickly access if needed; that's usually cash in a bank or credit union. It's recommended to have at least 6 weeks worth of liquid assets just in case the worst happens (some recommend 6 months, I think that's too long) ... like losing your job. Anything above that should be invested.

Depending on your age, the investments should be the proper mix of low risk (lower returns) vs higher risk (higher returns) investments. Basically, when you're young, you take more risk, which often leads to greater return on investments, and as you get older, you gradually change the mix to be less risky. When you retire, almost your entire investment portfolio is in low risk.

[Static_In_The_Attic]

As for me I always say don’t invest what you aren’t will to lose & when it comes to investing your emergency fund is your emergency fund. On the other side of things you can always go down to your bank & see what the Certificate Of Deposit rates are & invest short term as in 6 months & make a few dollars.

[Anonymous]

When deciding whether to keep cash for future expenses or invest it, it's important to consider your short-term and long-term financial goals, as well as your risk tolerance.

If you have upcoming expenses in the next few years, such as a down payment on a house, it may be wise to keep those funds in a savings account or another low-risk investment option to ensure that the money is available when you need it.

On the other hand, if you have a long-term investment horizon and are willing to take on some risk, investing the money in a diversified portfolio of stocks, bonds, or other assets can potentially lead to higher returns over the long term.

It's important to have a well-diversified investment portfolio that aligns with your financial goals and risk tolerance. Consulting with a financial advisor can help you determine the best investment strategy for your personal situation.

[Anonymous]

It depends how you are investing it. Given the state if the market or the foreseeable future (1 year), and interest rates, you're going to be hard pressed to make much more than you would in CD right now. I think you're fine how you are right now. I wouldn't change anything really. But this all comes down to preference. Personally I had more in an investment fund when I was your age but outside of that I didn't save anything when I was your age. So you're one up on me there.

[exitseven]

You can get a short term CD at 5 percent. Keep it parked there for a year and see where we are then.