One question we get pretty often is: “Where should I keep my money?” People want to know which types of accounts or investment vehicles are best for their financial goals.

Well, I came across a survey done by Morningstar that breaks down where the average American is keeping their money—excluding physical assets like houses or cars—and I thought it would be interesting to share those findings with you today.

Here’s the breakdown:

1. Employer-Sponsored Retirement Plan: The largest chunk of Americans’ investable assets—38%—is held in their employer-sponsored retirement plans (think 401(k)s and similar accounts). It’s not surprising since these accounts come with tax advantages and often include employer matching contributions.
2. Bank Accounts: Here’s where it gets a bit concerning — 23% of investable assets are sitting in regular bank accounts. While having an emergency fund is critical, keeping too much cash in a bank account may not be the best move in terms of growth potential.
3. Taxable Brokerage Accounts: 14% of Americans' investable money is in taxable brokerage accounts. These accounts give you flexibility but don’t offer the same tax benefits as retirement-focused accounts.
4. Traditional IRAs: 10%. These accounts offer tax-deferred growth, meaning you don’t pay taxes on your earnings until you withdraw them in retirement.
5. Roth IRAs: 7%. As we've talked about before, these accounts allow your investments to grow tax-free and offer tax-free withdrawals in retirement, making them a great tool if you expect to be in a higher tax bracket later in life.
6. Crypto Wallets: Surprisingly, 4% of investable assets are in crypto wallets. While it’s a smaller slice of the average portfolio, cryptocurrency is becoming more mainstream.
7. Education Savings Accounts: 3% of Americans' money is held in education savings accounts, like 529 plans, to help fund future educational expenses.
8. Other: 1% falls into the “other” category, which might include things like annuities or precious metals.

What Does This Mean for You?

It’s natural to want to compare where your money is to the average American’s portfolio, but that’s not always the healthiest approach. What really matters is whether your money is working toward your specific goals and whether it aligns with your risk tolerance. The key isn’t just where your money sits, but how it's invested in those accounts.

If you have any questions about whether your current setup is working for you—or if you’re curious about the right mix of accounts for your situation—don’t hesitate to reach out. We’re happy to help you make sense of it all.

Until next time, take care!