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.
And if we want to get really out in the weeds, there are ways to get money out of a retirement plan without penalty. Like taking a loan of up to 50% of the balance of your 401k (up to $50k), which you must pay back with interest, to yourself (including the interest), within 5 years. If you don't pay it back then it counts as a distribution and you start having to worry about taxes and penalties (if you're under 59.5).
Although it's probably fair to say that if you know a 401k self-loan is an option, you probably have $500 that's easier to get to.
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.
And if we want to get really out in the weeds, there are ways to get money out of a retirement plan without penalty. Like taking a loan of up to 50% of the balance of your 401k (up to $50k), which you must pay back with interest, to yourself (including the interest), within 5 years. If you don't pay it back then it counts as a distribution and you start having to worry about taxes and penalties (if you're under 59.5).
Although it's probably fair to say that if you know a 401k self-loan is an option, you probably have $500 that's easier to get to.