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Should You Buy The Crypto Dip While Bitcoin And Ethereum Prices Are Down? Here’s What Experts Say

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Should You Buy The Crypto Dip While Bitcoin And Ethereum Prices Are Down? Here’s What Experts Say

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In case you didn’t know, bitcoin is on discount right now. 

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That’s according to two experts and a major financial institution who say bitcoin is currently undervalued at $20,000. JPMorgan Chase recently valued the coin at $38,000 — roughly 90% more than its current price.

Bitcoin could be worth up to $100,000 in two years time, and its fair market value is currently between $40,000 and $50,000, according to Jurrien Timmer, the director of global macro at Fidelity Investments. Chris Brendler, managing director and senior market analyst at D.A. Davidson, expects bitcoin to go back up to nearly $38,000 by the end of this year and $50,000 by the end of 2023. 

“Bitcoin is a unique animal because it’s difficult to say what exactly it is worth,” says Brendler. “It tends to have these exaggerated moves on the upside when folks are only buying because they want it to go up in value. When it starts to go down, those folks exit. But the price of bitcoin will grow higher than it is today in the next coming years.”

So, what does this mean for the crypto-curious who are potentially eyeing bitcoin as an investment? Is now a good time to take advantage of the crypto market’s “sale” and invest? 

The short-term risks of investing in crypto might be worth its long-term potential rewards, according to some financial experts — as long as it isn’t holding you back from meeting your other financial responsibilities and you can clarify your long-term goals beforehand. 

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Here’s what you need to know before investing in bitcoin and other cryptocurrencies amid the downturn:

What’s Happening With Crypto Prices? 

The crypto and stock markets have had a rocky year so far. Bitcoin, ethereum, and crypto prices have crashed along with the stock market in recent months as investors grapple with continued surging inflation, Russia’s war on Ukraine, rising interest rates, and recession fears. 

The latest crypto market crash came after May’s inflation report showed continued high prices for consumers and the Federal Reserve hiked its benchmark interest rate by 75 basis points — the largest increase in nearly three decades. Roughly $2 trillion was wiped from the crypto market, and the S&P fell into a bear market.

Bitcoin on Saturday plunged below $18,000 — a new low since December 2020 — but fought its way back above $20,000 by Monday. Bitcoin continued to hold above $20,000 on Thursday, but is still down nearly 70% from its all-time high of $69,000 in November 2021. 

Ethereum meanwhile dropped under $1,000 over the weekend for the first time since January 2021 as the network braces for a massive and long-planned upgrade. Most cryptocurrencies tend to follow bitcoin’s lead. That means if bitcoin’s price is falling, ethereum and other cryptocurrencies are likely falling as well. 

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Still, some experts think the prices of bitcoin and ethereum could drop even lower. According to Kavita Gupta, venture capitalist and founder of Delta Blockchain Fund, it could be the beginning of a “crypto winter,” an extended period when prices fall and remain low, such as they did between early 2018 and mid-2020. Gupta says based on her technical analysis of the market that bitcoin could drop to $14,000 and ethereum could fall to $500 in the next coming weeks or months.

Should You Buy the Dip? How to Be Smart When Investing in Crypto

Experts say now could be a good time to get in the crypto market while prices are low, but only after you’ve assessed your risk tolerance and prioritized other aspects of your finances, like saving for an emergency, paying off high-interest debt, and investing in a traditional retirement account like a 401(k).

If there’s one thing you should know about investing in cryptocurrency, it’s that it’s volatile and highly unpredictable. Values fluctuate by the minute driven by speculation, hype, and the whims of broader economic conditions. Potential investors looking to buy in now while the market is down should understand that price fluctuations are par for the course, and be prepared for prices to fall even more. If you can’t stomach sharp market swings, you shouldn’t invest in crypto.

When it comes to your overall crypto investment strategy, only put in what you’re OK with losing. Experts generally recommend investing no more than 5% of your portfolio in crypto. Bitcoin and ethereum are the two cryptocurrencies that represent the best starting point for new investors, according to experts and NextAdvisor’s Investability Score

Bitcoin holds the highest score among of all cryptocurrencies, with ethereum right behind. Here’s how bitcoin and etheruem compare to the rest of the cryptocurrencies that are consistently among the top 10 by market cap, excluding stablecoins:

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Updated June 23, 2022

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How Much You Should Save In A Savings Account, According To Experts — And It’s Not ‘as Much As You Can’

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How Much You Should Save In A Savings Account, According To Experts — And It’s Not ‘as Much As You Can’

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The COVID-19 pandemic, and ensuing economic uncertainty, taught many Americans the importance of having adequate savings. But is there such a thing as having too much in savings?

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Yes, financial experts say.

While the general rule is that you should keep three to six months of living expenses as an emergency fund, keeping too much money in a savings account can actually cost you.

“Your cash sits idle and loses value due to inflation,” says Lauren Anastasio, director of financial advice at financial technology company Stash. “That downside offsets the need for keeping the cash on hand for an emergency or loss of income.”


That doesn’t mean you should spend all your excess cash, however. Rather, you should invest it in the stock market so that your money can grow long-term. While how much you should keep in your savings account depends on your individual financial goals and situation, if you find yourself with more than a year’s worth of living expenses in savings, it may be a sign that you should move your money to an investment account where it can work harder for you. 

How Much Can You Save in a Savings Account?

Banks and credit unions typically don’t have account maximums, nor are there any laws limiting how much you can keep in a bank account. So, you can deposit as much as you want into a savings account.

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However, one thing you should be aware of is FDIC insurance limits. Established in 1933 in response to the many bank failures during the Great Depression, the Federal Deposit Insurance Corporation (FDIC) protects consumers’ bank deposits in the event of a bank failure. 

FDIC deposit insurance applies to all deposit accounts at FDIC-insured banks; this includes checking accounts, savings accounts, money market accounts, and CDs. FDIC insurance will protect up to $250,000 in deposits per consumer per account. 

Credit union accounts have deposit insurance, also up to $250,000 per account, through the National Credit Union Administration (NCUA).

“There are many ways to go above that,” says Ken Tumin, senior industry analyst with LendingTree and founder of DepositAccounts.com. “For example, a joint account with a spouse is covered up to $500,000.” Spreading your money across multiple savings accounts with different banks is another way to ensure all your money is insured.

What Is the Average Savings Account Interest Rate? 

When you keep your money in a savings account, the bank will pay you interest on that balance. The annual percentage yield, or APY, determines the amount of interest you’ll earn. APYs can vary by bank and account type, with high-yield savings accounts typically offering higher APYs than standard savings accounts. However, savings account interest rates are relatively low across the board right now, due to the Federal Reserve slashing interest rates in 2020. 

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Certain banks may also offer elevated APYs on their savings accounts if you fulfill certain requirements — such as linking a checking account from the same bank and having a certain number of direct deposits every month.

“For brick and mortar banks, 0.06% is the average [APY],” says Tumin. “If you had $10,000 in savings, your return is just $6. Online banks almost always have higher rates. They have less overhead, and so can offer much higher rates than brick-and-mortar banks. The average savings rate for online banks is 0.5% — about eight times the brick and mortar rate.”

If you’re looking for a new savings account that offers a higher-than-average APY, check out NextAdvisor’s picks for the best savings account rates of 2022.  

You may also want to consider other deposit accounts besides savings accounts. Money market accounts, or MMAs, can offer slightly higher APYs than savings accounts, but the difference may not be significant in this current rate environment. Money market accounts also offer debit cards and check-writing privileges, making them a good blend between a savings account and a checking account. However, they’re subject to the same 6 withdrawals per month limit as savings accounts and may have higher minimum balance requirements than savings accounts. 

Certificates of deposits, or CDs, can offer higher rates than both MMAs and savings accounts. However, the tradeoff is that you must keep your money locked in that account for a certain amount of time. If you withdraw your money early, you may lose any interest you earn or pay a penalty. You can choose the duration of the CD when you open one — for example, one year, three years, or five years. CDs with longer maturity dates typically offer higher APYs.

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How Much Should You Have in Savings? 

When it comes to how much you should keep in savings, there isn’t one number that works for everyone. You should look at your individual financial situation — including your monthly income and cash flow, your monthly expenses, and any other financial obligations you have — to figure out how much cash you realistically need on hand.

“I firmly believe people should save three to six months of essential expenses,” says Anastasio. “That can be quite a wide range. Three months is appropriate for anyone with very highly marketable skills — in the event you lose a job, it wouldn’t take long to find another job— someone that is a renter, or dual-income households. In those cases, you can generally feel comfortable at the lower end of that range.”

By contrast, you may need more than that if there are more demands on your budget. 

“Six months of expenses is more appropriate for homeowners — since they’re more likely to have major expenses or repairs — those with children, and single-earner households.” says Anastasio. “If you have anyone depending on you financially — like a business partner or aging parent — you likely need six months or even more.” 

Besides being a safe place to store your emergency fund, savings accounts can also be useful tools to help you manage your short-term savings goals. 

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“If you expect to use that money in the next two or three years, keep it in savings,” Anastasio says. “If you’re getting married, buying a home, or starting a business, those are important life events that require a lot of capital. In a timeline that short, it makes sense to keep it as cash in a savings account.”

Why You Shouldn’t Keep Too Much Cash in Savings

In general, experts recommend keeping three to six months in the bank, though Anastasio says she understands that some people feel more comfortable with up to 12 months of expenses. However, once your account surpasses that level, the opportunity cost can be too high. 

“I would be hard-pressed to find circumstances where the opportunity cost to keep that much cash [over 12 months of living expenses] on hand is worth it,” says Anastasio. 

While keeping your money in a savings account will earn you a little bit of interest, interest rates on almost all savings accounts right now are too low to offer any meaningful earnings. Instead, you should make your money work harder for you by investing in long-term investments like stocks, index funds, or bonds. Particularly with longer-term goals, it makes more sense to invest than stash your money in savings so you can take advantage of compound interest and market growth. 

“With long-term goals, such as retirement, it makes sense to be more aggressive and invest for the potential of higher returns,” says Tumin. With retirement savings especially, investing your money also lets you benefit from tax-advantaged investment accounts like IRAs and 401(k)s. 

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The typical high-yield savings account has an APY of around 0.50%. By contrast, the S&P 500 — one of the common metrics used to measure the total stock market — returned an average of 13.6% annually for the past 10 years, according to data from investment bank Goldman Sachs. 

Here’s how much $10,000 would’ve grown in 10 years in a high-yield savings account at 0.5% APY, and invested in the stock market with a 13.6% annual return. 

Interest earned in a high-yield savings account (0.50% APY, compounded annually) Investment gains from investing in the S&P 500 (13.6% growth, compounded annually)
$511 $25,791

Keep in mind that unlike cash, investments are not 100% risk-free and could potentially lose their value. However, the stock market as a whole will generally see positive returns over the long term. That’s why, given a long enough time horizon and a diversified portfolio (such as one consisting of low-cost index funds), you can balance the risks of investing while reaping far greater returns than you could ever get from a savings account. 

How to Grow Your Savings Account

While it’s generally a good idea to invest your extra cash once you have an adequate financial safety net, not everyone may be at that point yet. If your balance is below the recommended three to six months of living expenses guideline, you can build your savings by using these tips: 

Trim Your Budget

The first step in increasing your savings is to create or review your budget. View your bank statements and credit card bills to find out how much you spend on your monthly expenses. Look for expenses that you can reduce or eliminate completely so you can put more money into savings. 

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One useful tool is Trim, an app that analyzes your spending and identifies opportunities to save money. It will even negotiate your cable, internet, and phone bills for you, and it takes 15% of your annual savings. According to the company, users save an average of $620. 

Set Aside Windfalls

During the year, you may receive cash that you didn’t expect. Whether it’s a birthday gift or a tax refund, saving that extra money as soon as it arrives can help you build your savings over time. 

For example, the average tax refund was $3,226 in 2022, according to the IRS. If you put the entire amount into your savings account, that could provide a substantial boost to your savings balance. 

Save Your Spare Change

If you have trouble saving money, consider signing up for a spare change app like Digit, Qapital, or Chime. Spare change apps round your purchases up to the nearest full dollar and deposit the difference into your savings account, making it easy to build your savings balance without any work on your part.

Set Up Automatic Withdrawals

Managing money is often psychological; one way to save more is to trick yourself into not realizing you’re saving. By setting up automatic withdrawals from your checking account — for example, transferring $50 to your savings account every payday — you can save money before you can mentally spend it. You probably won’t even notice the withdrawals are happening, but those regular deposits can make a big difference.  

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You can use NextAdvisor’s savings calculator to see how much small changes can add up over time. For example, here’s how much you’d have if you saved $50, $100, or $250 every month. 

After 6 Months After One Year After Five Years
$50 Per Month $301 $602 $3,038
$100 Per Month $602 $1,204 $6,075
$250 Per Month $1,503 $3,008 $15,186
Examples assume a $1 initial deposit and 0.50% APY

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Should You Pay Off Debt Or Save For Emergencies First? Experts Say You Can Do Both

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NextAdvisor Credit Cards Should You Pay Off Debt or Save for Emergencies First? Experts Say You Can Do Both

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Lisa Ferber

Lisa Ferber

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Lisa Ferber is a personal finance journalist who has written for CNBC, Crain’s New York Business, Barron’s,…

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February 3, 2022 | 7 Min Read

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We want to help you make more informed decisions. Some links on this page — clearly marked — may take you to a partner website and may result in us earning a referral commission. For more information, see How We Make Money.

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Deciding whether to pay off debt or save for an emergency is an important choice to make, but you might be able to do both.

Since the pandemic’s start in March 2020, 42% of credit card holders who already had debt have seen the amount grow, according to a September 2021 Bankrate survey of 2,400 U.S. adults. Meanwhile, only 4 in 10 Americans have enough savings to cover an unplanned expense of $1,000, according to a separate Bankrate survey from January. Bankrate, like NextAdvisor, is owned by Red Ventures.

The most important thing is to take an honest look at your financial situation and then put helpful habits in place immediately, according to two experts we talked to. Here’s what you should keep in mind as you make your own plan.

What to Consider When Deciding 

You want to look at the interest rate on your debt and allocate your cash accordingly, says certified financial planner and financial psychologist Brad Klontz. If your rate is low, you could split 50/50 between debt payoff and emergency savings, and if it’s high, you could do 90/10 with a focus on debt. “When the habit’s in place, you can then shift how much money you’re putting in each direction, but you’ve set all the pipelines up,” says Klontz.

At the same time, you want to do what makes you feel successful on your debt-payoff journey, says Summer Red, AFC®, education senior manager at Association for Financial Counseling and Planning Education. “I would probably have less emergency savings so that I could pay off that debt faster,” she says. 

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When You Should Build an Emergency Fund First

Ideally, you would have at least a baseline emergency fund, but if you don’t have any emergency savings at all, it’s a good idea to save some money right away. While experts generally recommend at least three months, you don’t necessarily need that immediately. Start by saving enough money to help cover an unplanned expense like a car or home repair, or a big medical bill. “Then it might be time to approach paying down debt,” says Red. 

Once you’ve saved some money for emergencies, take care to leave it untouched and only for emergencies. “If you’re not maintaining your car, so it breaks down every other month, you might be using your emergency fund for something that may not be strictly speaking an emergency,” says Red. Instead, you can add up the recurring expenses, such as birthdays or oil changes, divide by 12, and save that amount every month, she says. 

The goal is to start putting money away regularly, no matter how small the amount. “For some people, $100, that’s not much. In a year or two, it’s a substantial amount of money,” says Klontz.

Can You Build Savings and Pay Off Debt at the Same Time?

Setting up both pipelines helps start the process. “I’m a strong advocate of doing it all right now, not waiting,” says Klontz, adding that too many people put off saving while they pay off debt. “Because life goes on and you didn’t set up that account.”

Pro Tip

Automating your debt payments and savings can help you avoid late fees and grow your emergency fund.

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After you’ve secured your baseline, you can steer more money toward debt payoff. Interest rates are another thing to keep in mind, says Red. The interest rate on your debt is likely much higher than the interest you’ll earn from a savings account. In other words, you’ll likely pay more in interest owed on your debt than you’ll earn in interest on your savings, says Red.

You can also consider a balance transfer card to help you pay less interest on your credit cards and leave you more cash for emergencies. A balance transfer card will let you consolidate higher-interest debt onto a single new card that has a 0% interest rate on transferred balance for 12 months or more, depending on the card.

Before opening and using a balance transfer card, make sure you have a plan in place to pay down the balance before the promotional interest rate expires. Otherwise, you could end up in another debt cycle when the higher normal interest rate kicks in.

How Much Should Be in Your Emergency Fund?

Experts commonly suggest you have three to six months of living expenses in your emergency fund. “It used to be pretty consistently three months before 2008, and then we had a devastating blow to the economy, and that’s when it stretched,” says Red.

Of course, how much you’ll need depends on whether it must be used for something smaller like a basic car repair, or something more traumatizing like a job loss. “If you’re in a field that there’s only a certain number of positions or if you’re extremely highly paid, it can be hard to be able to replace that income, and you might want a little bit more padding there,” says Red. 

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For longer-term financial emergency scenarios, consider an adjusted budget that cuts down your spending to only essential living expenses. To figure out an emergency fund that works in that scenario, you can cut out spending like streaming subscriptions, clothes, or other discretionary spending until you are on stronger footing.

You’ll also want to consider your levels of anxiety and security, and whether they are hindering your quality of life. “How important is it to you to have an emergency fund, on an emotional level?” says Klontz.

Ways to Tackle Debt Faster

Look at your spending habits

Paying down debt starts with looking at how the debt happened so you’re not just putting a Band-Aid on the problem, says Klontz. “What’s the mindset? What were the events? How did you get here?” he says. “If you don’t figure out how you got there, and how to stop the bleeding and how to heal whatever it is, you’re going to end up there again.”

This is especially true considering that many people have some tendency that impedes their efforts, such as buying things on sale that they don’t really need, says Red. “‘Do you see this, it’s 8% off?’ And it’s like, ‘OK, that dress is lovely, but you have four closets full of dresses with the tags still on. Have you tried to pay off your credit cards?’” she says.

Snowball vs. avalanche methods

Being able to cover the minimum on your debts is essential to avoid fees, and after that you have some choices. Tackling the smallest debt first and then rolling your cash toward the next lowest debt is called the snowball method, and paying off the debt with the highest interest rate first is called the avalanche method. 

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While prioritizing the debt with the highest interest rate will cost you the least, it’s about what encourages you to stick to a plan. “If you’re somebody who’s driven by saving every possible penny, go with interest rate first,” says Red. “If you’re somebody who’s struggled to pay your debt off for a long time, maybe just getting one paid off will be really satisfying and help you keep going.”

Automate your payments and savings

Setting up automatic payments can also help you reach your goals. “That’s where the magic happens because you’ll forget about it,” says Klontz, who says people have a tendency to keep things as they are. “You’ll go back to your status quo bias, and before you know it you’ve made major progress on those goals.”

Canceling an automated gym membership, for example, is hard because you have to admit that you don’t prioritize your health, says Klontz. But when you automate something that’s working for you, the status quo bias helps. “If you’ve set up an emergency fund or a college savings fund, the mental energy you have to do is go in and say, ‘I’m going to rob from my child’s college fund,” he says. “Picture the goal. When there is no goal, the money disappears,” says Klontz.

Automating your debt payments also helps you avoid late fees, and you can reward yourself after you’ve paid off a debt or received extra income like a tax refund or a bonus at work. “Use part of it for something fun but then use the rest for financial goals,” says Red.

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