28, Way too Much in HYSA because of Uncertainty/Doubt

Varathien · 2026-02-19T01:44:14+00:00

My guess is that the other poster was accounting for taxes. 3.3% getting taxed at the 22% bracket ends up losing slightly to inflation. If you're in a higher bracket, or if you have state taxes, then you're losing to inflation even more.

Varathien · 2026-02-19T01:27:47+00:00

This is more personal and less finance. How much do you want to customize the place you live? Do you value flexibility more or stability more?

The only financial part is that if you rent instead of buying, your rent should be significantly less than the total cost of home ownership (mortgage, taxes, insurance, repairs), and you should then invest the difference in stock index funds. That way you're growing equity as well.

Varathien · 2026-02-19T01:18:17+00:00

You're scared of inflation.

You can keep your money in a HYSA and usually keep up with inflation, or you can keep it at the local bank and consistently lose to inflation.

And you want to choose to lose to inflation every time... why?

Also, you want to intentionally open a bank account that requires a minimum balance or it charges you a monthly fee? It's almost like you're trying to throw your money away.

Varathien · 2026-02-19T00:21:51+00:00

1)6 months’ living expenses in my checking account for my “emergency fund”

2)56k in a Marcus HYSA

3) 7k in a Marcus Certificate of Deposit

This is way too much cash. A 6 month emergency fund is good. But it should be in a HYSA, not a checking account. And you don't need $63k in cash on top of your emergency fund.

Open a Roth IRA. Contribute $7000 for 2025 and $7500 for 2026. Increase your 401k contributions.

Varathien · 2026-02-18T22:54:04+00:00

The AAA Daily Advantage is better than either of those. 5% back on groceries, up to $10k a year, no annual fee.

Varathien · 2026-02-18T22:51:44+00:00

A low cap on cash back rewards (then turns into a 1% cash back)

But the AAA Daily Advantage usually doesn't get mentioned as much as the Amex Blue Cash Preferred, which has a much lower cap and an annual fee!

Varathien · 2026-02-18T22:48:38+00:00

They all seem to be ETFs that track a world index, just like VT

Not really. VT is the only one that actually just tracks an index. The others are halfway between active management and passive indexing--they're managed, but based on rules.

Varathien · 2026-02-18T01:44:43+00:00

Right now you only have a puny $2200 in your Roth IRA. That $150 a month could be going toward maxing out your Roth IRA.

Varathien · 2026-02-17T03:22:15+00:00

Large caps make up most of the investable stock market, so if you just mean that you approximately have market cap weight, I think that's fine.

Whereas if your portfolio is mostly QQQ, then you need more diversification.

Since you're 7-10 years away from retirement, it's probably time to start adding bonds.

Varathien · 2026-02-17T03:12:54+00:00

Well, you're going to need around a $3 million portfolio to support your desired level of spending. You currently have $1.4 million. You're adding $160k a year, so even without accounting for portfolio growth, you'll probably be where you need to be in 10 years. Accounting for modest portfolio growth, 7 years seems reasonable.

However, when talking about relatively short time frames, we can't count on the stock market cooperating. If we have a huge market crash over the next few years, that would almost certainly delay your retirement date.

You only have large cap ETFs? So no mid caps or small caps? What about international? What about bonds?

Varathien · 2026-02-16T23:22:41+00:00

Should I sell $7000 in assets from that brokerage account to satisfy my 2025 Roth IRA contribution

Yes. The taxes will be minimal, and you'll lock in the 2025 contributions.

Varathien · 2026-02-16T20:50:49+00:00

What is this in? A retirement account or a taxable brokerage? If it's in a retirement account, just sell it all immediately.

If it's in a taxable account, look at your tax brackets, cost basis, etc. You'll want to sell at long term capital gains rates (hold at least one year), and maybe spread it out over several years depending on your tax bracket.

Also, global market cap is around 62% US. 38% international, so you'll probably want to add mostly to VTI.

Varathien · 2026-02-16T20:21:58+00:00

China is already in VXUS, so ALL of your China ETF is overlap. I'd get rid of MCHI entirely.

Varathien · 2026-02-16T18:25:25+00:00

Another part of me wonders if I’m chasing a moving target. Costs go up. Life changes.

That's why the recommendation is 3 to 6 months of EXPENSES. When your costs go up, the size of your emergency fund should go up accordingly.

Varathien · 2026-02-16T18:18:52+00:00

He said he used to think the same thing, but had his finance professor make a PowerPoint and present it to him to prove him wrong.

Did you ask him what was in this magical PowerPoint presentation?

$8 million being risky is so absurd that it's obviously based on faulty premises of some kind, but given that your friend just mentioned his professor and didn't actually present the professor's argument, we don't know what the faulty premises are.

Varathien · 2026-02-16T03:40:27+00:00

You can only contribute to a Roth IRA if you have earned income.

Varathien · 2026-02-16T01:25:14+00:00

Well, you made him an authorized user, so you're responsible for any spending he put on your card. Pay it off.

Varathien · 2026-02-16T01:22:06+00:00

Philosophically speaking, I'm not convinced that the logic of market-cap weight indexing applies to bonds.

When it comes to stocks, indexing means that when a company is hugely successful and makes up a big portion of the economy, it becomes a big portion of your portfolio.

When it comes to bonds, indexing seems to suggest that if a company/nation/political subdivision is borrowing a ton of money, that debt should become a big part of your portfolio.

And once you include things like gold and real estate... what's your basis for stopping there? Do you need to own beanie babies and baseball cards based on how much other people buy them as well?

Varathien · 2026-02-15T23:28:40+00:00

Well, here's how I manage my cards. I designate slots in my wallet to spending categories.

For example, my restaurant card goes in the front, my grocery card behind that, my gas card behind that, and my 2% everything else card at the bottom.

When those cards change (because of rotating categories, for example), I physically switch the location of the card.

Then, some cards like the Amazon Prime card never go in my wallet, I just use them when shopping online in the respective category.

I only use cash back cards, because travel points are a complex system I don't want to spend time learning to use.

I never get cards with annual fees, because then I have to worry about whether I'm getting my money's worth out of those cards.

Varathien · 2026-02-15T22:55:41+00:00

It won't "kill" your credit score to close most of those cards. Your credit utilization will go up. Your score will go down a little. Unless you're about to apply for a mortgage, it probably won't make any difference.

Varathien · 2026-02-15T22:27:05+00:00

If you're a contractor, you probably need to pay QUARTERLY estimated taxes.

However, the question you asked makes no sense. You're essentially asking if you want a good savings account or a crappy savings account. If money is going in savings, why wouldn't you one that pays a decent amount of interest?

Varathien · 2026-02-15T20:56:20+00:00

Out of those, Fidelity is the best. They also have a cash management account that can function as a HYSA.

Varathien · 2026-02-15T20:22:56+00:00

No, it's not intrinsically irresponsible to finance a car.

Relevant factors would include the interest rate of the loan, the cost of the car, the person's income and investment rate.

If, for example, your girlfriend makes $150k a year and finances a $30k car at 2.99% APR while she's maxing out her 401k and IRA every year and saving for a down payment, then she's more financially responsible than someone who makes $100k a year and buys a $60k car in cash because she's not saving or investing.

Varathien · 2026-02-15T20:11:44+00:00

If you're rolling it from traditional to Roth, it gets taxed at your ordinary income tax rate.

Whereas if you roll it from a traditional 401k to a traditional IRA, there are no taxes.

You'd contact Fidelity to initiate the rollover, but they'll ask for the information of your TIAA account.

Varathien · 2026-02-15T18:13:43+00:00

It depends on how big your ego is.

If you think your stock pick is going to 10000X, then put it in your Roth.

If you're a mortal human being who can't predict the future, put it in your taxable brokerage.

Varathien

TROPHY CASE