It's time for the b a q a A. The b a q A what to say? The b a q A with Manday although she's out sick today, the b a q A with him today, the b a.
Q a A.
It is time for Brianna Vision Questions and answers. You have some questions, We have some answers. Well today is just me because maybe have the nerve to have lost her voice, honey. But I'll be the voice for both of us. So although we have some answers, I don't have all the answers.
Right.
I'm not your auntie, I'm not your mom, not your financial advisor, your attorney, but I am a smart brown girl when it comes to some money, career, business, etcetera.
So we have a guest today on b a q A with day Shante.
To be exactly, she's be a listener and she has a really great question.
So we invited her. Come on.
If you want to be invited to come on, and you know you don't do go head on to Branna Vision podcast, especially on Instagram. Leave us a voice note, like a message voice note. When you do that, our producer MANI will listen, and you know she might invite you on okay, just like you won't be like you know you do.
Welcome Sante. How are you? I'm good and you I'm good good. Where are you from, Santa? I am from the West Coast. I think I put that in the message.
I don't know why I had to go so hard for it, but I've been born and raised in California.
Okay, Okay, West Coast Okay. So Sata, you have a question for me?
What does that?
My question is when it comes to emergency savings, should you be putting your emergency savings in a high deal savings account or should you invest it into ETFs?
So, first of all, great question.
I'll say this, So one, emergency savings is a safety net right, meaning that it is there to protect you in case of loss of income or in case you experience some sort of financial trauma or drama, to protect you. The purpose of savings is not to make you money.
So I think that, like I want to like it's almost like and some people be mad at me when I talk about insurance, right, because you have like whole life which I'm like boom right, Because the purpose of insurance is not to make you money, is to protect your assets, so emergency now, because we confuse emergency savings with just money in general. Yes, we love our money to make money, but emergency savings is literally a safety net. So you don't want to put in a position not
to be there to protect you. Right, So, if you put it in a high yield savings account like Allline Only Bank or whatever, as long as I only only bank is FDIC insured, meaning that you get your money back up to like two fifty if you if the bank should go under, then you can be pretty much assured that when you need this safety net, the money will be there. Now, the reason why we like high yield savings is because although the perfect purpose of savings is not to make you money, we don't want to
lose so much to the inflation. You know, right now inflation is super on the high side, but back in the day, inflation was like two or three percent. Emergency savings accounts for yielding like you know, one or two percent, so you were basically net net even it was there ready for you in case.
Of and emergency. I want you to think about this, like let's.
Just say you're on a on a like a flight and the you know, like the air the mask comes down, right, So the purpose of like the air mask coming down, it's not for fashion, like girl, we're not looking turning looks, is to save you in the in the case of emergen Can you imagine like if you were like, but it would be cute if it was like, you know, giving a look or whatever. It's like, that's not the purpose. So like, so that so the reason that's why so
I like ETFs. But the problem with putting your emergency savings. So let me, I always forget what like ETF stands for e TF, right, so at ETF, I always forget the name. I just could I just call them ETFs all the time?
Right me? ETF is an exchange traded fund.
So what that is is basically, it's a basket of investments. Typically it could be stocks, bonds, and some other investments. Right, It's a basket that is traded like a stock a mutual fund. The difference is just it's a basket, but it's not traded back and forth like a stock during the day. You can only buy mutual funds after the market is closed. You can buy it like you know, you can purchase a mutual fund, but it's not traded back and forth.
So an ETF is almost like.
A love child between a stock, which you can buy and sell all day, but it's one singular piece of a company and a mutual fund, which is a basket of stocks.
You know, So at ETF is like.
The love child between those two things because it's also a basket, but it could also be traded. Hold that thought before we continue. Let's go to break because you know, we got more to talk about and we're back. And what I what I do like about ETFs too, is that the more hands on someone is on the other side to help you manage that money, the more you're.
Going to be charged. So i'll tell you what that means.
Meaning then with a mutual fund, there is typically a person that is picking the fund, and that the so mutual funds the expense ratio, meaning the cost to invest is higher because there is somebody typically actively choosing the fund. Okay, right, so you have to pay more money because that person's like, oh, I need to get.
Paid to this.
ETFs are typically like electronically generated and so there is still an expense ratio. There's still there's still a cost. But because it's not this person picking it, the cost is less. And with stocks, it's you picking it, it's not a person behind the scenes. So oftentimes there is no expense ratio, There is no no, no fee for trading a stock except for, like, you know, whatever the
platform is charging you. You see, the further way you get away from human intervention, the less and less money you pay to actually play.
Does that make sense? It makes perfect sense, you know.
And so I just say all that to say that I do want you to invest he but not with your emergency fund, because now that you've worn your face masks for fashion, the plane is going down. What you're gonna breathe with? You know what I mean. So it's like, so I, at the very least, what.
You could do? Do you like, do you have an emergency fund? Do you have money set aside?
Now?
I sure do? Okay? Good.
So what you might consider tay is say, once I get to three months, anything excessive over three months, I.
Can invest, okay, or.
You might say any depending on Now three months is the bare minimum, depending on how quickly you can replace your income if necessary. So like three months for a nurse is more than enough, three months for a teacher probably more than enough.
Three months.
For maybe an engineer, they might need six months. So whatever your bare minimum is that you would need months to replace your income. Once you get to that, then anything outside of that, absolutely you ought to invest it.
Okay, that makes sense. Okay, it's hard sense, yes, right.
So I just want you to I want you to visualize when you're like, oh man, this money's not making money for you. I want you to visualize someone walking down the street with their air masks from the airplane, turning a look. Meanwhile, someone's up in the sky, like I need my mask. Who took the mask from the plane? You know they want the stunt and now we need it, Like, you know, you don't want to take that money that
you need. The purpose of emergency savings is protective. There's some money that's meant to earn, there's some money that's meant to grow, and there's some money that's.
Meant to protect. And that's protective money. Okay, protecting money, Yeah, that's protecting money.
Is there to protect you in the case of emergency at least three months, more and more if you feel more comfortable.
But I will say it is possible to save too much.
I think that's what you're thinking about, because there might be people who have five years worth to save.
I'm just making that up. That's too much. That's too much.
You know, once you get to whatever that thresholders, you're three months or six months. Anything above that, you're right that money is being wasted.
And I have been there. I'm sorry.
I just think like I have to switch my mind from like you said, it's not meant.
To make you money, it's meant to protect you. I have to switch my mind to that.
You know, it's like your warm winter coat versus your cute winter coat.
Right, you're like, it's really gold out.
Well, you wouldn't know because you're in California or whatever. It does get a little cold, right, But don't you have some things where you're like, this is my big, old, ignorant coat, where it's not about cuteness, it's just because it's cold out.
And then I have like something else.
It's like it don't really keep me warm, but it's really so I could be cute when I go out.
Yes, like I got the jacket I would buy versus the jacket my mama brought me exactly.
So I want you to be like, this money is saving that's my mama bought jacket.
Right, It's like, all right, this is.
My responsible you know, and anything above that then I can start looking at jackets that I'm purchasing for myself.
Okay, So just like you know, yeah, that's really good. Okay, good? Well was it helpful?
Yeah?
It was so much like I'm wanted to change my whole game plan. So thank you. Good, I appreciate it.
Good.
Now you're welcome.
I talked to you though, because oh my god, I cannot wait.
I will tell you mom, what's your mom?
You bet?
What's her name? Help woe.
Over here to ask you a good, smart and relevant financial question.
You did a good job to Sevet. Oh she'd let me hear that.
So thank you so much.
I appreciated so much.
Here we go, bye bye, Hey ba fan, we could not do this show without your support or the support of our team behind the scenes. The Brown Emission Podcast is produced by Cumulus Podcast Network. It's edited by the wonderful Emani Crosby and produced by Tanya Bustos. Dennis Stimplinsky is our in house tech guru, and I am Bandy Woodrid Santos your co host, and I will see y'all next week,