Cash Savings sitting in my bank account

[Maximo Jacobo]

Hello Bigger Pockets folks

I am new to real estate and plan to invest in the market a year from now (when I am financially better on paper). I am currently working on my education and my finances. However, in the meantime, I would like to use my savings that are parked (in high yield savings accounts) possibly to invest in index funds, because the interest rates that I am getting are not enough.

Considering that I never had an investment account like IRAs, 401k, etc. Would investing in Index Funds be a good idea without any of these accounts? Are there other options that would allow me to earn at a minimum 5 % return back? And is it smart to invest in stocks without any tax-deferred accounts?

Thank You In Advance for any advice

[Brian J Haney]

Maximo, I have found that by assigning the right purpose to what you are saving for helps create the appropriate framework for what things you might end up saving/investing into. For example, if I say "These funds need to be for a rainy day in case I need them," then it may be much easier to determine how you'd like to allocate them, since...in that scenario, liquidity and access would be significantly important, then often liquid banking instruments that may not pay a great rate of return seems more appropriate because the point is access and not necessarily ROI. If, however, you say "I want these funds to help me retire," then since that entails a much larger and longer term purpose, the potential vehicles (instruments and/or specific investments) would be different. While a lot of people on this thread have provided several great suggestions, I would hesitate to add something to the mix because advice such as "investing in index funds periodically overtime" may be a good idea, or it may not be, but in a vacuum it's hard to say. For what it's worth, I'd encourage you to work on putting some form of a plan together that helps identify all of these considerations and helps create some better definition and purpose (with or without a professional depending on how confident you feel about it). The most financially successful people I know and have as clients are not the ones that have made the most money, they are the ones that have made the most of their money! Doing that involves a plan and a strategy