Personal finance advice on investing extra cash from paycheck instead of relying solely on savings

From Yahoo Finance: 2025-06-28 10:02:00

With the Federal Reserve lowering interest rates, high-yield savings accounts are seeing reduced yields. Chief market strategist Callie Cox advises reevaluating savings strategies, suggesting younger households save enough without excess. In a lower interest rate environment, determining the right cash level is crucial as rates continue to drop.

Cox highlights the importance of investing cash wisely, as savings accounts may not yield as much as other investment options. While cash currently earns between 4-5%, the stock market averages an 8% annual return over time. Cox emphasizes the significance of this difference in returns over the long term.

For individuals nearing retirement, Cox recommends investing over straight savings, adjusting the risk factor as needed. Even in retirement, taking risks with investments can help provide income. Emergency funds should remain in cash for immediate access, but excess cash should be invested wisely for future financial goals.

Read more: 5 Things You Should Do With Extra Cash From Your Paycheck