General Z fell in love with high -yielding cash savings. The Federal Reserve only attended the party.

Gen Z Sapers and investors may face a critical problem on their hands, and the federal reserve is about to make it worse.

Banks are preparing to pay less interest on high -yield savings accounts after the Federal Reserve reduced the main interest rate in September 17, and It indicates more price cuts To come this year.

Now, many younger investors have to control the fact that high-end savings accounts-and other cash investments such as CD and market funds-will be less profitable.

Malian experts say that many younger adults have already have a lot of money compared to stocks, bonds and other assets that can build wealth for decades.

“Younger investors tend to maintain their assets more than other age groups, which can put them in an improper position if savings account rates decrease, as it may happen in the coming weeks or months after the federal reserve price is reduced this week,” said Kate Ausford, an investment specialist at the Nerdwallet NRDS. “Cash feels safe, but this large cash pillow can be more than withdrawing on its total financial form if the interest rate decreases.”

The highest return was announced at the online savings account of 4.35 % in September, according to the banque data. This is much higher than the national average of 0.61 %, Note the site.

Scroll via Tiktok, Reddit RDDT and other websites where Young people flow for financial informationIt is clear that the high -yield savings account is seen as a major element in any sound financial plan. Social media refers to high -yield savings, and the phrase is often shortened to “HYSA”.

A closer look at the TIKTOK retail is used as a growing cash attractive story. Throughout the year, the #Hysa retail brand was used on the platform at an almost similar rate with #Stocks, according to Tickertrends, the data platform that sees consumer patterns aimed at merchants, hedge funds and institutional investors.

On Tiktok, the use of #Hysa Hashtag increased by 17.5 %, while #stocks increased by 18.7 %. In the same period, the retail brand of #intestraats decreased 9 %.

The graph below is shown three years of Tickertrends data on the #Hysa retail brand, which will continue until the end of August. (Y The Axis shows the daily display of Tiktok videos with a retail mark.)

“Many people fall into a beautiful, back -back trap,” Tyler Gardner told Marketwatch. Former director and financial advisor now It wanders through the forest Talk to more than 2.5 million online followers on platforms including Tiktok. Gardner said he was “rupture” in the comments section when his videos are wondering about the wisdom of storing a lot of money.

Gardner indicated that it is important that people have a high -yielding savings that return to critical needs in the short term, such as emergency situations. But it is also important not to put money more than required in the account. As Gardner sees, it should not be more than 10 % of the assets of a person who is investing in cash, especially when he is younger.

Many people have certainly flocked to high-yield savings accounts and other cash products, as federal reserve rates have increased several years ago-not only not the younger population composition. For example, Bank CDs It maintains about $ 2.89 trillion in the second quarter, up from $ 1.24 trillion in the first quarter of 2022, when the Federal Reserve began to increase the interest rate from about 0 %.

Many younger Americans look at the stock and investment market as a major means of building wealth. This is confirmed by the rise of investment platforms in the field of retail, such as Robinhood Hood and Etoro Etor in recent years. Six out of 10 people between 18 and 28 years old said they had invested outside 401 (K), according to Harris poll this summer.

But many younger Americans have just started in their career and adult lives. With early stage salaries, they face a difficult balance; They have to stay standing on his feet now, when living costs are high, and they must invest to move forward in the long run.

The younger investors said they have increased their monetary property by a more severe rate than the older investors during the past year, according to ETORO surveyed in August. The share of investors from GEN Z with money has grown by 10 degrees Celsius, to 71 %, since the previous year, while 1 percentage of children’s investors has grown to 81 %.

“The high cash holdings among young people may seem intuitive from the investment perspective, with the traditional wisdom that indicates that they should outperform their investment contributions to allowing time to make heavy lifting. But the reality often works differently from the theory,” said Brett Kinwell, an investment analyst in the United States.

Also read: The amazing GEN Z Strategy aims to rewrite the playing book for young investors

Kinwell pointed out that many families General Z and Millennial have reasons to continue to focus on criticism, such as home purchases, renovations, weddings, or a family start. He added that investors, including the youngest, may sell assets and sitting on money while thinking about the upcoming investment step.

However, people with long-term prospects for investment and do not feel that they need to provide excessive “they should remember the strong historical performance of a varied wallet-including assets such as stocks, bitcusd and Gold GC00,” said Kinwell.

Next month, Gardner said he was planning to collect a video around the place where critical savings could turn, along with high -yield savings, with low rates. He said that the responsible step for participants should educate viewers on the alternatives at this stage.

He pointed out that investment funds in the money market are one place to search for yield. Although it is up to banks when they reduce savings rates offered and the depth of these cuts, these funds follow the standard of the standard in the Federal Reserve closely.

The average return for seven days on the largest money market funds was 4.07 % on Thursday, according to Crane Data, a website that follows the market industry. It was already below Smidge after lowering Wednesday’s prices. Beit Crane, head of the site, said by late next week, said the average interest rate is likely less than 4 %.

With market boxes, “There is no puzzle … they follow the federal reserve.” On the other hand, banks may be “fast to cut and slow walking.”

Some of the Markwatch financial planners have noticed that they noticed that younger customers have a great tendency to keep more criticism. For some Eric Roberts customers, “criticism and security”.

He said: “It seems that it is a known entity in exchange for the unknown in the stock market, which, especially this year, seemed a little bit with all fluctuations.”

Although some customers may stumble from market fluctuations. Robert said that he must often go on the point that “a lot of money sitting in a bank also represents a risk, just as investing in the market does – instead of the risk of investment, the risk of inflation or risks that lose your money is a great purchase force over time.”

The three main American stock market standards are closed Understand the decision of the Federal Reserve Average.

So, how much money in savings account? It is an ongoing question that remains important, regardless of the interest paid on the account. Federal Reserve reduces rates because it wants to prevent The labor market is a slowdown.

The amount allocated to savings You may depend on answers To a couple of questions, the advisers said. How many people do in the family? How much are their monthly expenses? How easy to get a new job?

The consultants said that the size of the ideal emergency fund ranges between three months of expenses and at least six months, depending on the circumstances.

The high savings account will also be a good way to save upcoming expenses, such as a vacation, a car or a batch of the house.

“In additional money parking for long -term growth,” said Joe Bougan, founder of ParkMount Financial Partners in Boston. He pointed out that the money is for emergency situations, or to provide a large -term purchase, such as the batch provided. “The rest should be placed at work.”