You're not wrong about it being more complicated, but we're also talking about an emergency. Getting $500 from a savings account in an emergency even if you're at monthly transaction limit is going to cost you maybe $10 in fees. The premise is "can't cover a $500 emergency," not "has $500 sitting in a non-interest bearing checking account."
FYI: Federal Regulation D's requirements were removed in 2020. Banks aren't required to limit monthly "convenience transactions" anymore. Though plenty of them still pretend it's required so they can charge fees.
brokerage account liquidations come with a massive loss
Where'd you pull that out of? They come with some tax consequences of course but where are these "massive losses" coming from? Are you counting decades of future earnings against them? If you are, leaving the $500 in checking was already a "massive loss."
I'm not trying to say people are in great financial shape. But going from that kind of question surveyed to this kind of headline would be dishonest. The honest researched would ask something like, "could you deal with a $500 emergency without incurring debt."
I'm not trying to say people are in great financial shape. But going from the that kind of question surveyed to the headline is dishonest.
The survey wasn’t a “checking only” survey, making that connotation in the first place is dishonest, doubling down on it is stupid.
Getting $500 from a savings account in an emergency even if you're at monthly transaction limit is going to cost you maybe $10 in fees. The premise is "can't cover a $500 emergency," not "has $500 sitting in a non-interest bearing checking account.”
Again, not what the survey said. If said can you pay 500 tomorrow, not do you have 500 in your checking, you’re the one making claims that is not in the survey.
FYI: Federal Regulation D's requirements were removed in 2020. Banks aren't required to limit monthly "convenience transactions" anymore. Though plenty of them still pretend it's required so they can charge fees.
Find me a bank that lets people pull from their savings constantly, they’re eating their shirt if they do. Just because the fed stopped requiring it means absolutely nothing, it’s still in practice across the board.
Where'd you pull that out of? They come with some tax consequences of course but where are these "massive losses" coming from? Are you counting decades of future earnings against them? If you are, leaving the $500 in checking was already a "massive loss."
Again, show me where in the survey it said checking only, you’re going off what the dumbass said above, not what’s actually in the survey…
Find me a bank that lets people pull from their savings constantly,
"Emergency" now means "constantly." Okay.
Again, show me where in the survey it said checking only
Me: "Why do you think withdrawing money from a brokerage account is a massive loss?"
You: "But what was the question in this survey?!"
Did you quote the wrong thing or are just that obvious at dodging questions?
Edit: You want to discuss what the question was in this particular case, you can go track down the survey the guy in video was discussing (unsourced). Until someone shows me otherwise, I'm going to assume "researchers" and "journalists" are being dishonest as we've all come to expect.
You made a non argument because the fed changed a rule but bank practices stay the same.
Me: "Why do you think withdrawing money from a brokerage account is a massive loss?"
You: "But what was the question in this survey?!"
Did you quote the wrong thing or are just that obvious at dodging questions?
I’m sorry, are we pretending 401ks don’t have penalties for withdrawals now? What happens to the match when you withdraw early? You keep making non arguments that have zero to do with the survey.
Edit: You want to discuss what the question was in this particular case, you can go track down whatever the guy in video was discussing (unsourced). Until someone shows me otherwise, I'm going to assume "researchers" are being dishonest.
Sooo you didn’t watch the video… he was reading the questions verbatim.
Just some simple things to point out since I see this back and forth. I presume we are talking about the standard US banking system here. There are several common account types, generally anyone can get these accounts in the US. I'm sure there's exceptions for history of fraud, crime, or whatnot but the average person can get all of these. I had most of them when I was 18 making peanuts.
Checking Account -- I think we all understand this one
Savings Account -- usually no penalties and readily available with no minimum balance and 4% interest. Can often get ATM withdrawals of cash instantly, but in any case should be accessible in 1 business day. Almost all of these accounts allow 6 withdraws a month of any amount with no fee or penalty.
"Regular" Brokerage -- It's a trading account to buy stocks, bonds, funds, and what not. It is not a 401k. There's no penalty or limit of any sort generally to transfer things in and out. At least not that would affect someone in the 60k-100k income range. You would have to liquidate any securities you have at present market value that may or may not have changed value.
Retirement accounts (401k, IRA, Military thrift savings, etc.) -- these do carry a penalty of 10% for early withdrawal under 60, often you cannot withdraw if you still work at a company, etc. Not the best place to keep emergency money, it's supposed to be for retirement savings.
CD Accounts -- These guarantee an interest rate in exchange for a commitment to keep the money in them for a certain term. Penalty varies by bank, typical is a fee equal to 6 months of interest, so for $1000 at 5% interest, it would be $25 fee to liquidate this.
As to whatever else is being bickered about, I don't care. I don't think a ton of this is even really in this video. I just wanted to spell out the most common accounts, because I keep reading things about accounts that aren't really accurate.
are we pretending 401ks don’t have penalties for withdrawals now
No one is pretending anything. You're just clearly unfamiliar with these things. A 401k is a type of brokerage account, but it is also a retirement account. Regular non-retirement brokerage accounts have no penalty of any kind. You would just sell some sort of security (yes, during market hours probably) and the funds would be available immediately. Yes, it technically takes a business day to settle the trade, but that is usually obscured by the brokerage who just deposits the funds immediately. A 401k is certainly not the only kind of brokerage account, nor is it what anyone is referring to when it's called a "brokerage account" instead of "401k" explicitly.
Sooo you didn’t watch the video… he was reading the questions verbatim.
"46% said they don't have $500 saved for an emergency." He's obviously reading the results of a study verbatim. That is not the question. And, like the other poster said, I've seen this trick before. The question can be something like "do you have at least $500 in savings dedicated to emergencies" and the respondent will go "it's not earmarked for emergencies, so no."
You're not wrong about it being more complicated, but we're also talking about an emergency. Getting $500 from a savings account in an emergency even if you're at monthly transaction limit is going to cost you maybe $10 in fees. The premise is "can't cover a $500 emergency," not "has $500 sitting in a non-interest bearing checking account."
FYI: Federal Regulation D's requirements were removed in 2020. Banks aren't required to limit monthly "convenience transactions" anymore. Though plenty of them still pretend it's required so they can charge fees.
Where'd you pull that out of? They come with some tax consequences of course but where are these "massive losses" coming from? Are you counting decades of future earnings against them? If you are, leaving the $500 in checking was already a "massive loss."
I'm not trying to say people are in great financial shape. But going from that kind of question surveyed to this kind of headline would be dishonest. The honest researched would ask something like, "could you deal with a $500 emergency without incurring debt."
The survey wasn’t a “checking only” survey, making that connotation in the first place is dishonest, doubling down on it is stupid.
Again, not what the survey said. If said can you pay 500 tomorrow, not do you have 500 in your checking, you’re the one making claims that is not in the survey.
Find me a bank that lets people pull from their savings constantly, they’re eating their shirt if they do. Just because the fed stopped requiring it means absolutely nothing, it’s still in practice across the board.
Again, show me where in the survey it said checking only, you’re going off what the dumbass said above, not what’s actually in the survey…
"Emergency" now means "constantly." Okay.
Me: "Why do you think withdrawing money from a brokerage account is a massive loss?"
You: "But what was the question in this survey?!"
Did you quote the wrong thing or are just that obvious at dodging questions?
Edit: You want to discuss what the question was in this particular case, you can go track down the survey the guy in video was discussing (unsourced). Until someone shows me otherwise, I'm going to assume "researchers" and "journalists" are being dishonest as we've all come to expect.
You made a non argument because the fed changed a rule but bank practices stay the same.
I’m sorry, are we pretending 401ks don’t have penalties for withdrawals now? What happens to the match when you withdraw early? You keep making non arguments that have zero to do with the survey.
Sooo you didn’t watch the video… he was reading the questions verbatim.
Just some simple things to point out since I see this back and forth. I presume we are talking about the standard US banking system here. There are several common account types, generally anyone can get these accounts in the US. I'm sure there's exceptions for history of fraud, crime, or whatnot but the average person can get all of these. I had most of them when I was 18 making peanuts.
Checking Account -- I think we all understand this one
Savings Account -- usually no penalties and readily available with no minimum balance and 4% interest. Can often get ATM withdrawals of cash instantly, but in any case should be accessible in 1 business day. Almost all of these accounts allow 6 withdraws a month of any amount with no fee or penalty.
"Regular" Brokerage -- It's a trading account to buy stocks, bonds, funds, and what not. It is not a 401k. There's no penalty or limit of any sort generally to transfer things in and out. At least not that would affect someone in the 60k-100k income range. You would have to liquidate any securities you have at present market value that may or may not have changed value.
Retirement accounts (401k, IRA, Military thrift savings, etc.) -- these do carry a penalty of 10% for early withdrawal under 60, often you cannot withdraw if you still work at a company, etc. Not the best place to keep emergency money, it's supposed to be for retirement savings.
CD Accounts -- These guarantee an interest rate in exchange for a commitment to keep the money in them for a certain term. Penalty varies by bank, typical is a fee equal to 6 months of interest, so for $1000 at 5% interest, it would be $25 fee to liquidate this.
As to whatever else is being bickered about, I don't care. I don't think a ton of this is even really in this video. I just wanted to spell out the most common accounts, because I keep reading things about accounts that aren't really accurate.
No one is pretending anything. You're just clearly unfamiliar with these things. A 401k is a type of brokerage account, but it is also a retirement account. Regular non-retirement brokerage accounts have no penalty of any kind. You would just sell some sort of security (yes, during market hours probably) and the funds would be available immediately. Yes, it technically takes a business day to settle the trade, but that is usually obscured by the brokerage who just deposits the funds immediately. A 401k is certainly not the only kind of brokerage account, nor is it what anyone is referring to when it's called a "brokerage account" instead of "401k" explicitly.
"46% said they don't have $500 saved for an emergency." He's obviously reading the results of a study verbatim. That is not the question. And, like the other poster said, I've seen this trick before. The question can be something like "do you have at least $500 in savings dedicated to emergencies" and the respondent will go "it's not earmarked for emergencies, so no."