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Comment by mgkimsal | Hacker News Reader

this comes up a lot, and I can never find the actual questions that get asked on these surveys. do they mean an actual savings account at a bank? the kind that pay 0.02% interest? few people I know, even with high net worth and liquidity, have much of anything in a 'savings account'. But... "Only 41% of adults reported having enough in their savings account".

Do they just mean 'savings'? Or liquid cash? I can never find the actual text of the questions asked, and any clarifications on this point, although I see pop media references to these sorts of surveys regularly

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> few people I know, even with high net worth and liquidity, have much of anything in a 'savings account'

Really? It's fairly common advice to store an emergency fund in something akin to a savings account (or at least something with FDIC backing). Either way, it seems bizarre for a high net worth individual not to have at least $500 in something extremely liquid like a checking/savings account.

Either way, it's fair to assume it means liquid cash, since the question is basically "could you afford an unexpected $500 expense?".

If you want to take that study to task, I think the far more interesting statistic is the 20% who would put it on their credit card: While those could be people who are just going into debt to afford the bill, it could also be people who just pay their card off in full every month and want whatever rewards they might be entitled to from using the credit card.

> Really? It's fairly common advice to store an emergency fund in something akin to a savings account (or at least something with FDIC backing)

That’s where I have my emergency fund (earning nearly zero interest of course). If OP knows of some other type of account with enough liquidity to use as an emergency fund AND generates significant interest, you have my full attention!

Check out online banks. My Ally Bank savings account offers 1.75% interest. Another option could be a CD ladder.

Some banks, like Ally, also offer a "no penalty" CD, which has lower interest rates than a regular CD, but you can pull your money out at any time without paying a penalty, like you would on a regular CD.

allybank, capital one savings, personalsavings.americanexpress.com, and some others all offer >= 1% interest now. Some are >= 2% that I've run across. Still lower than inflation, but better than .001%

Increased fed fund rates and tapering off QE has been having effects. Retail customers generally are unaware of this, so retail banks are still able to not pay any actual interest.

A lot of the weirdness in the market (from Tesla to GE and others) is due to increased returns from 'safe' investments causing easy money for risky ventures to start to dry up. Expect failures as companies built on nearly free money start having to pay up or fold. Some will survive, many won't.

Which options over 2% APY do you know of?

Looks like I was wrong (the >= 2% were CDs) - Marcus.com (Goldman Sachs side bank) is currently offering 1.8% though, so not far off.

https://www.marcus.com/us/en/savings/high-yield-savings

Some will survive, many won't.

how precarious is it? any thoughts/guesstimates on the percentage that will fail because of higher rates?

The Fed had a good graph on the sky high amount of debts many companies are laying on, but I'm having a hard time finding it right now. A bunch of outlets have written on it, here is the first one I found http://money.cnn.com/2018/02/26/investing/corporate-debt-ris...

As to how many will fail is anyone's guess. Retail has already started to have a reaping (with help from Amazon). If a trade war kicks off price increases for goods from China, that probably won't help a lot of them.

Sub-prime auto market is not doing well either, that should hurt auto manufacturer numbers, but nothing crazy there at the moment.

I think everyone is still trying to guess.

Search out checking accounts from local credit unions. Mine pays around 2% APY on balances up to $25k with some very minimal requirements. I have $5 in my savings account there because I have to in order to maintain my membership, but I have ~5 months expenses in my checking.

Obviously, this might not work as a single solution if your monthly expenses are much higher than mine, but it could still be a decent supplement.

Money market funds have significant yield compared to banks; the Vanguard Federal Money Market Fund (VMFXX) has a current yield of 1.81% and is used as default settlement account on Vanguard brokerage accounts (easy to transfer in and out from).

If you can hold off on needing the funds for a year, then US I-Bonds can be purchased from TreasuryDirect. I-bond rates are adjusted semi-annually so they always yield more than inflation and currently at 2.52%. Treasury T-bills can be purchased in 4, 8, 13, 26, and 52-week terms. Current rate for 4-week bills is around 1.89%.

Thanks jbronn and sibling commenters. Lots to look into. I have the e-fund in my local credit union's money market and always just assumed that would be the best I could get. I-bonds seem to be a good compromise for non-emergency savings that don't have to be liquid.

> in something extremely liquid like a checking/savings account.

I was asking specifically if the surveys mean actual "savings" account, which often have some restrictions on them ("Make a total of 6 transfers and withdrawals each monthly statement cycle with no Withdrawal Limit Fee"). If you're getting a grand total of 0.01% interest, there's not much reason to also restrict activity as well.

That said, I realize I do have a 'savings' account, via an online-only bank, getting about 50x what my local bank's savings account rate is. I just didn't think of it as a 'savings' account as I'm so accustomed to thinking of 'savings acct'='brick and mortar location'.

Yes, they literally mean "savings account", which is an anachronism. Most people I know leave their money in a checking account instead, since the interest rates are comparable for all practical purposes (most people do not expend effort to chase twenty extra dollars in interest per year).

Given that the median American household has $1000/month in discretionary income -- money they can spend on beer or savings -- it wouldn't make sense that 60% of Americans don't have $500 to cover an emergency. Unless it was defined as cash in a "savings account", which most people (myself included) don't use.

yeah, thanks. it's a weird old-fashioned thing, although, as I replied to someone else, I realized I do have a 'savings account', in one of those fancy new online banks, paying ~50x what my local brick and mortar pays. It's such a weird situation, because... if they even paid something like .7% or 1%, I wouldn't have bothered to move money out. Slowly, I will probably just stop using them when all new activity is done online, but I'm a child of B&M banks, and breaking the connection 100% is hard to do.

They go on to mention that they'd have to put it on credit card, or ask friends, so while the article says savings account I don't think they are that literal. But you're right, it's a flaw in the language.

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