Personal Finance 101
Asked on 05 Feb 2020
For example after 10 years of earning 50k take home pay, I would have 100k in a high interest savings account:
Should I leave them in the savings account in cash or invest them else where?
What is the threshold before me needing to act?
Can I save less now since I already have 100k in cash and just allocate 30% to wealth building?
20% + 30% seem much, but that would be good if achievable.
However the separation into savings versus wealth building is a theoretical construct.
Asset allocation and low investing fees are the prime points to deliberate well.
I suggest that rather than just looking at the absolute number, consider how your money makes you feel.
Does this $100k make you have a healthy relationship with money? Does it make you feel secure and sleep well at night or does it leave a nagging feeling at the back of your mind, whispering "if only I can have more"?
If you are apprehensive that no matter how much you save, you will never 100% feel at ease, perhaps you can look into the suggested benchmarks that we are supposed to save for our retirement at various ages. for instance, by the time we hit 40, it would be ideal if our savings is three times our annual salary. here's a good article: https://www.cnbc.com/2019/06/21/retirement-savings-by-age-how-much-youll-need-to-save-at-any-age.html
My usual advice is to only keep your emergency fund, 1 month's of income, and any money needed within 3 years as cash.
Invest everything else.
So if you're starting with 0, all your money saved should be allocated to satisfy this goal.
After this is done, invest all money saved monthly.