Bank is offering 4.6% APY - should I park $220k my savings in there?

[jespy]

Hello!

I would like to seek some advice on how to manage $220k that I have sitting in my savings right now. This morning the bank sent me an email offering me a 4.6% APY with a 12 month promotional interest rate. I'm thinking of parking $220k in there for a year. Is this a good move if I don't need the cash right now? I figured it's better than sitting in my savings as I'm accruing only $190 a month in interest.

I have no interest in stocks as I find it extremely volatile and I can't wrap my head around how it works.

EDIT: Thank you everyone for your input. Your comments have encouraged me to learn more about investing and to not be afraid of the unknown. I downloaded FIDELITY and I have also ordered a book to brush up on my financial literacy! Will post an update in the coming months!

 

[sazbastein]

@jespy MMF from Vanguard is 5.28% last I checked earlier this week.

 

[ering]

@sazbastein And cumulative it’s 5.4%/yr, so it’s a pretty great deal.

 

[weloki]

@ering why risk it when you can get a clean 4.6 lmao...1% is not worth it

 

[balkan]

@weloki What are they risking? Seriously explain this to me.

Outside of an additionally 2k of gains there’s also the lack of state and local income taxes as vanguard MMF funds are treasury backed funds. Depending on the locale this is a huge deal.

 

[ering]

@balkan I believe that’s true with VUSXX, but not VMFXX, but good point. Thats significant in some states.

 

[ering]

@weloki The biggest risk is that the US government collapses. The FDIC won’t be able to protect your HYSA either if that occurs.

You’re throwing away 1%.

 

[weloki]

@ering that's the fear mongering every brokie says cause they got no money and hope others lose

 

[ering]

@weloki These MMFs only uses US government products. For them to lose value, the US government would have to fail.

They’re as safe as an HYSA, but if you trust the FDIC over US Treasuries, then knock yourself out. Go be “safe”.

 

[lachelle]

@sazbastein What’s the symbol for the vanguard MMF?

Any downsides to it?

 

[sazbastein]

@lachelle VMFXX it’s not federally insured but it has never broken $1.00 and never will IMO.

 

[adamgarfield]

@jespy Upgrade HYSA is 5.21% right now. Thats $955/mo

 

[jespy]

@adamgarfield Where is that rate from? Who’s offering 5.21%?

 

[msmia]

@jespy Fidelitys premium money market fund FZDXX is liquid and its 5.16% and if you take compounding into effect it’s closer to 5.2x.

Upside, higher yields and compounding interest. Downside and the same will apply to saving accounts is they can vary depending on what rates are doing and if rate isn’t locked like in a CD or fixed income solution it can fluctuate.

 

[classic123]

@adamgarfield it only has 250k max insurance

 

[2iceblest]

@adamgarfield Rates dropping for hysa... Get cds.

 

[mcolley10]

@jespy Are you saving this money for a large expense in 3-5 years? If not, you should have a robust 6-9 month emergency fund in a money market fund gaining ~5.3% and invest the rest in the stock market.

 

[jespy]

@mcolley10 I’m saving this money for a down payment on a condo that I’ll be closing at the end of this year / early 2025. I just want to venture and park this money somewhere for now.

Not saying I don’t want to learn about stocks. But I have given it a try - have traded and used Robinhood in the past but have failed miserably. I don’t want to be glued to my phone everyday and checking the stock market.

 

[christianchurches]

@jespy Given that you have a need for this money soon (

 

[jespy]

@christianchurches Thank you for taking the time to explain. What app or company do you use to purchase index fund / S&P 500?