LogFAQs > #939679498

Not very smart, since that money can be earning you interest/dividends (i.e. free money for doing nothing). You should always keep a little money in the bank, as an emergency fund, but that's probably too much.

With that kind of money, I'm assuming you're already maxing out your tax-advantaged accounts (i.e. Roth IRA, 401k, etc.). If not, do that first.

The very least you could do is put it in a high yield savings account, per the above post. I personally use Ally. Banks have been cutting their interest rates these days, so you won't get much out of this, but it's better than nothing. You could also look at opening a CD account with your bank, to earn a little extra interest, in exchange for less flexibility/liquidity. I use a no-penalty CD at Ally, so I can access my money whenever. Either way, it's a little bit of free money with no risk involved.

If you're not planning on using all that money in the next 5 years or so, and you don't mind taking on some risk, you could consider investing in the stock market, instead of real estate. Open a brokerage account, and put it in an index fund, since those are less risky than individual stocks. S&P 500 index funds (e.g. SPY) are popular. It invests in the 500 largest companies, so there's no chance of you losing everything. I personally use a world index fund (VTWAX), which invests in 8000+ companies (It's more diverse, and less risky, but earns less than SPY during good times). Regardless, then you just sit back, ignore the stock market, and get free money (dividends) every once in a while. Oh, and you have to hope that this pandemic won't cause another Great Depression. That too.


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