How should I distribute my savings?
"You need to track all of your expenses first, inventarize all of your assets and liabilities, and set financial goals. For example, you need to know your average monthly expenses and exactly what percentages interest each loan charges, and you need to know what to save for (your children, retirement, large purchases, etc). Then you create an emergency fund: keep between 4 to 6 months worth of your monthly expenses in a savings account that you can readily access. Base the size of your emergency fund on your expenses rather than your salary. This also means its size changes over time, for example, it must increase once you have children. You then pay off your loans, starting with the loan charging the highest interest. You do this because e.g. paying off $X of a 7% loan is equivalent to investing $X and getting a guaranteed 7% return. The stock market does generally does not provide guarantees. Starting with the highest interest first is mathematically the most rewarding strategy in the long run. It is not a priori clear whether you should pay off all loans as fast as possible, particularly those with low interest rates, and the mortgage. You need to read up on the subject in order to make an informed decision, this would be too personal advice for us to give. After you've created that emergency fund, and paid of all high interest loans, you can consider investing in vessels that achieve your set financial goals. For example, since you are thinking of having children within five years, you might wish to save for college education. That implies immediately that you should pick an investment vessels that is available after 20 year or so and does not carry too much risk (e.g. perhaps bonds or deposits). These are a few basic advices, and I would recommend to look further on the internet and perhaps read a book on the topic of ""personal finance""."
"This is only a partial answer to your question #1. If you have a conservative approach to savings (and, actually, even if you don't), you should not invest all of your money in any single industry or product.  If you want to invest some money in oil, okay, but don't overdo it. If your larger goal is to invest the money in a manner that is less risky but still more lucrative than a savings account, you should read up on personal finance and investing to get a sense of what options are available.  A commonly-recommended option is to invest in low-cost index funds that mirror the performance of the stock market as a whole.  The question of ""how should I invest"" is very broad, but you can find lots of starting points in other questions on this site, by googling, or by visiting your local library." "You'd want the money to be ""liquid"" and ready for you to use when tax time comes around. You also don't want to lose ""principal"", i.e. if you put it into stocks and have the value of what you put in be less than what you invested—which is possible—when you need the money, again, at tax time. That doesn't leave you with many good choices or an amazingly good way to profit from investing your savings that you put aside for taxes.  CDs are steady but will not give you much interest and they have a definite deposit timeframe 6 months, 1 yr, 2 yrs and you can't touch it. So, the only reasonable choice you have left is an interest bearing checking or savings account with up to 1% interest (APR)—as of this writing Ally Bank offers 1% interest in an online interest savings acct.—which will give you some extra money on your deposits. This is what I do." You seem to have a grasp of the basic principles involved, but your estimation of the risk you are taking seems a bit low. Your non-investment reserves are unlikely to cover your expenses for more than a month, so the chance that you would need to sell investments to cover additional expenses is high. You mention that I am flexible with the 'cash on hand' amount. For instance, for about three months I put a very tight spending/investing freeze on my life because I knew I'd be leaving jobs and moving (I already had the other job lined up). Those savings presumably went toward moving expenses, as your usual savings were insufficient. In the event that you are laid off suddenly, you might find yourself in the same position again, with added unplanned expenses like fees for breaking a lease. Your current plan involves selling investments to cover the gap. Based on your age you have probably only invested in a predominantly positive market, so the chance that you might need to sell investments for cash seems like a reasonable trade-off for the added potential gains. Your perception might change if the markets go south and you are forced to sell into a down market, possibly at a significant loss. You also don't indicate if your investments are currently sufficient to cover an extended period of unemployment. You are taking on a lot of risk under your current plan. Essentially you are trading possible investment gains for flexibility and time. By making small changes like saving at least enough to move as you did previously, you can give yourself time to react to job loss or other unexpected financial need. Rather than give the traditional emergency funds advice, I suggest you look at the broader picture. The total amount of savings/risk is up to you, but you should consider your current savings as insufficient to rely on as a safety net. "@MrChrister - Savings is a great idea. Coudl also give them 1/2 the difference, rather than the whole difference, as then you both get to benefit... Also, a friend of mine had the Bank of Dad, where he'd keep his savings, and Dad would pay him 100% interest every year. Clearly, this would be unsustainable after a while, but something like 10% per month would be a great way to teach the value of compounding returns over a shorter time period. I also think that it's critical how you respond to things like ""I want that computer/car/horse/bike/toy"". Just helping them to make a plan on how to get there, considering their income (and ways to increase it), savings, spending and so on. Help them see that it's possible, and you'll teach them a worthwhile lesson." "Goodness, I wish I could put away half my paycheck. Not to rain on your parade, but a 6-month emergency fund is not quite ""very good.""  It is the typical starting time frame.  Personally, I would feel more comfortable with a 2+ year fund.  That is a bit extreme, but only because many of us can barely seem to make it around to a 6-month fund.  So, we focus on the more attainable goal. I say you do all three.  Make saving money your priority, but do enjoy some of it; in moderation.  Do not plan on making any big purchases with it, but know that you will eventually be able able to do so.  Money not spent is worthless Idle money is worthless.  Make some -- hopefully -- prudent investments with some of your money.   A small portion of that investment portfolio can/should be in speculative investments.  Maybe even as much as 20% of your investment portfolio, since you are young.  Consider that money gone and you will hopefully be surprised by one of those speculative investments.  That is the crucial point: earmark a small portion of your investment portfolio which you are willing to lose.  However, do not gamble with it.  Research the hot emerging technologies, for example, and find a way to make an investment. So, in summary: You may have more money that you know what do with, right now.  However, that does not mean you need to go out and spend it all.  Trust me, as you get older you will think of plenty of good uses for that money." "Since I, personally, agree with the investment thesis of Peter Schiff, I would take that sum and put it with him in a managed account, and leave it there. I'm not sure how to find a firm that you like the investment strategy of.  I think that it's too complicated to do as a side thing.  Someone needs to be spending a lot of time researching various instruments and figuring out what is undervalued or what is exposed to changing market trends or whatever. I basically just want to give my money to someone and say ""I agree with your investment philosophy, let me pay you to manage my money, too."" No one knows who is right, of course.  I think Schiff is right, so that's where I would put the amount of money you're talking about.  If you disagree with his investment philosophy, this doesn't really make any sense to do. For that amount of money, though, I think firms would be willing to sit down with you and sell you their services.  You could ask them how they would diversify this money given the goals that you have for it, and pick one that you agree with the most." You don't. My budget for the year takes my gross income and nets out tax, spending, etc to account for every dollar.  My assets (and the target of the savings during the year) are a balance sheet item. The sum already there isn't part of each year's budget. "Congrats on saving the money but unfortunately, you're looking for a 24% annual rate of return and that's not ""reasonable"" to expect.  $200 per month, is $2,400 per year.  $2,400/$10,000 is 24%. In a 1% savings account with spending of $200 per month spending you'll have about $7,882 at the end of the year.  You'll earn about $90 of interest over the course of the year.  I'm sure other people will have more specific opinions about the best way to deploy that money.  I'd open a brokerage account (not an IRA, just a regular plain vanilla brokerage account), break off $5,000 and put it in to a low fee no commission S&P index fund; which CAN lose value.  Put the rest in a savings account/checking account and just spend wisely." Start as soon as you can and make your saving routine.  Start with whatever you feel comfortable with and be consistent.  Increase that amount with raises, income gains, and whenever you want. You have to balance several concerns here. The primary problem is that if you go to the effort of saving your money you want to also be sure that your savings will not lose too much of its value to inflation. Ukraine had a terrible inflation spike in 2015 for obvious reasons. Even as inflation has settled down in 2016, it is stabilizing around 12% which is very high  Exchange rates are your next concern. If you lose a large percentage of the value of your money just in the process of exchanging it, that also eats away at the value of your money. If you accept the US Federal Reserve target of 2% inflation, then you should only exchange money that you will hold long enough that both exchange fees will outweigh the 10% inflation advantage. Even in cases where you have placed your money in a foreign currency, there's a chance that your government could freeze accounts denominated in foreign currencies, so there's always the political risk that you have to factor in. For that reason keeping foreign currency in cash also has some appeal because it cannot be confiscated as easily. You could still certainly be robbed, so keeping all of your savings in cash isn't a great solution either. All in all, you are diversifying your savings if you use the strategy of balancing all three methods. Splitting it evenly to 5% for each method isn't the most important. I would suggest taking advantage of good exchange rates (as they appear) to time when you buy foreign currency. "If I had to take sides, I'd think that it would be better to be able to divide up the entirety of your savings into big ""buckets,"" as others are saying in their answers -- if not in physically accounts, then at least conceptually. Let's say you're 45 years old and have $350,000 in various accounts.  I would argue that you should at the very least know this level of detail: So, if you get in a really, really bad snowmobile accident that costs $100,000, you know, at least conceptually, that: Now, you're in a better position to revise your goals.  Maybe you decide that real estate isn't ""all that"" and you allocate the entire shortfall to that item, and reallocate it to start the first Snowmobile Safety Program in the country. So now it looks like this: But had you not compartmentalized the funds to begin with, you wouldn't have known where you stood." If held in one savings account, how can I easily manage what percentage is planned for which   purpose? I used a spreadsheet for some years, but found it clumsy for everyday use. Thus I wrote some software which my wife and I use for our short-term as well as long-term planning, available at http://budgeter.sourceforge.net. It specifically helps with splitting the money in one or several accounts into logical categories. (The software is not the most user-friendly ever, so there may be better suggestions that follow, but it works well for us. Please feel free to suggest improvements to it as well.) "For what it's worth, the distribution I'm currently using is roughly ... with about 2/3 of the money sitting in my 401(k). I should note that this is actually considered a moderately aggressive position. I need to phone my advisor (NOT a broker, so they aren't biased toward things which are more profitable for them) and check whether I've gotten close enough to retirement that I should readjust those numbers. Could I do better? Maybe, at higher risk and higher fees that would be likely to eat most of the improved returns. Or by spending far more time micromanaging my money than I have any interest in. I've validated this distribution using the various stochastic models and it seems to work well enough that I'm generally content with it. (As I noted in a comment elsewhere, many of us will want to get up into this range before we retire -- I figure that if I hit $1.8M I can probably sustain my lifestyle solely on the income, despite expected inflation, and thus be safely covered for life -- so this isn't all that huge a chunk of cash by today's standards. Cue Daffy Duck: ""I'm rich! I'm wealthy! I'm comfortably well off!"" -- $2M, these days, is ""comfortably well off."")" Congrats on saving aggressively when you're young. I'm not a huge fan of tax-advantaged accounts because the rules can change on them, and there's already a penalty for you to take out that money for most purposes until you've almost tripled your age. Free money (a match) overcomes this reservation for me, but I'm not contributing anything beyond that.  I'm paying my taxes on the rest and am done with them. Watching your money grow tax-free for another 37 1/2 years only to see your (and everyone else's) marginal tax rate rise isn't much fun.  I'm not saying that will happen, but it certainly could. Consider also setting up a CD ladder. CD rates are often better than savings account rates. You have a 12-month CD that you purchase in January with a twelfth of your money, then another small one in February, then another in March.... then, when January comes around again, you a little more money to the first CD, and the ladder is complete. The idea is that you have more access to your money than one big CD, since you'll always have a CD maturing next month that you can get to in case of an emergency, and you can get better rates on a 1-year CD than on something else (with less risk of being locked into a bad interest rate). And you'll be less tempted to tap it all at once to buy some fancy car or what-not because you can't get at it all at once (without a penalty). And in a major emergency, losing a few percent of your interest for early withdrawals is likely the least of your problems.