{"id":10056,"date":"2021-12-27T18:27:02","date_gmt":"2021-12-27T18:27:02","guid":{"rendered":"https:\/\/zackspcg.com\/blog\/?p=10056"},"modified":"2022-02-26T13:05:37","modified_gmt":"2022-02-26T13:05:37","slug":"how-to-put-excess-savings-to-work-in-this-market","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/how-to-put-excess-savings-to-work-in-this-market\/","title":{"rendered":"How to Put Excess Savings to Work in this Market"},"content":{"rendered":"\n

Darcy V. from Rapid\nCity, SD asks: <\/em>Hi Mitch, Over the past year and a half my husband and I\nhave saved quite a bit of cash and are also generally spending less. We\u2019ve\nsurpassed our emergency savings comfort level, but now feel a bit trapped. The\nmarket is too high to invest but cash means we\u2019re losing to inflation. What do\nyou suggest we do? <\/p>\n\n\n\n

Mitch\u2019s Response:<\/strong><\/p>\n\n\n\n

Thanks for emailing your question. Your story is similar to\nthat of many American families at the moment. For many, the pandemic meant\nreceiving stimulus checks while also diverting spending away from services,\nwhich has resulted in a cash surplus. According to the Federal Reserve Bank of\nNew York, households have accumulated $1.6 trillion in excess savings,\nfollowing four consecutive quarters of record savings rates.1<\/sup><\/p>\n\n\n\n

Researchers at the New York Fed say that the massive cash\nhoard is not necessarily due to an intent to be more astute savers \u2013 it is\nbeing propelled along by \u2018generally spending less,\u2019 as you reference in your\nquestion. <\/p>\n\n\n\n

I\u2019d call this a very good problem. <\/p>\n\n\n\n

Not Sure Where to Invest? Start with This Step!<\/a><\/strong>
<\/a>  
If you are unsure where to invest, there are simple steps you can take to get started.  Knowing your net worth is a great place to start as it is critical to your financial well-being and can help you prepare for what\u2019s ahead.
 
If you have $500,000 or more to invest and want to understand how to measure your net worth, download our guide Measuring Your Net Worth<\/em>.2<\/sup> Simply click on the link below to get your copy of Evaluating Your Net Worth <\/a>2<\/a><\/sup><\/strong> today!<\/p>\n\n\n\n

Assuming you have six to twelve months\u2019 worth of income\nreplacement set aside in emergency funds, I think it\u2019s a good idea to get some\nof your extra cash to work. While I understand your reluctance to invest in the\nstock market, I would also remind you and readers that it is rarely a great\nidea to try and time the market. As the old saying goes, it\u2019s \u201ctime in<\/em> the market, not timing<\/em> the market.\u201d If you do not need\nthis money for 10+ years, and your long-term goal is to grow the assets, then I\nthink investing in a diversified portfolio of equities could be a fine option. <\/p>\n\n\n\n

But let\u2019s say for argument\u2019s sake you are still hesitant\nbased on the market trading close to all-time highs, coupled with a general\nsense that the economy is not doing that well. What I would advise, then, is to\nformulate a plan to invest the money over time \u2013 perhaps a percentage now, a\npercentage in three months, six months, etc. This strategy is effectively\ndollar-cost averaging, and I think it gives you a reasonably good way to\naddress your feeling that the market is too high. <\/p>\n\n\n\n

One other idea I would offer you, in the spirit of the\nholiday season, is to consider a charitable gift to an organization of your\nchoosing. There is an opportunity in 2021 to take a tax deduction that is not\notherwise available. According to the IRS, \u201cUsually\ntaxpayers who take the standard deduction cannot deduct their charitable\ncontributions. The law now permits taxpayers to claim a limited deduction on\ntheir 2021 federal income tax returns for cash contributions they made to\ncertain qualifying charitable organizations. These taxpayers, including married\nindividuals filing separate returns, can claim a deduction of up to $300 for\ncash contributions to qualifying charities during 2021. The maximum deduction\nis $600 for married individuals filing joint returns<\/em>.\u201d This could be\nanother great way to put some of your extra cash to good work. <\/p>\n\n\n\n

Another suggestion that may help the feeling of being \u2018trapped\u2019 is knowing and evaluating your net worth. While we may not know exactly what is next for the market, knowing your net worth can be critical to your financial well-being and can help you prepare for what\u2019s ahead.
 
Calculating your net worth may give you a better idea of where you stand in terms of your long-term investment goals. If you have $500,000 or more to invest and want to understand how to measure your net worth, download our guide Measuring Your Net Worth<\/em>.3<\/sup> Simply click on the link below to get your copy today!<\/p>\n","protected":false},"excerpt":{"rendered":"

Many Americans happily have excess savings\u2014but with a high stock market and inflation, what should investors do? <\/p>\n","protected":false},"author":3,"featured_media":7436,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[66,71],"tags":[],"class_list":["post-10056","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mitchs-mailbox","category-private-client-group"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/10056","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=10056"}],"version-history":[{"count":1,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/10056\/revisions"}],"predecessor-version":[{"id":10237,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/10056\/revisions\/10237"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=10056"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=10056"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=10056"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}