Where to Keep Your Reserve: Bank, Broker or Wallet
Liquidity, protection and risk trade off differently in each. Here is how to split a reserve so it is there when you need it.
Three places, three trade-offs
A reserve can sit in a bank, a brokerage, or a self-custodied wallet. Each gives up something different for something different. The point is not to pick one; it is to split across them on purpose.
Bank: protection, less yield
A high-yield savings or money market account is insured up to the limit and reachable in a day or two. You give up yield and take near-zero risk of loss. This is where the bulk of a reserve belongs.
Brokerage: liquidity plus a little more yield
A money market fund at a broker can pay slightly more than a bank and settles fast. It is not a bank deposit, so it is not insured in the same way, but the risk of a stable government money fund breaking the buck is very low. Keep the part you want a touch more yield on here.
Wallet: full control, full risk
Holding your own keys means no platform can freeze or fail on you, but it also means no one can help if you lose the keys or make a mistake. This suits only the small part you are willing to risk losing entirely.
A sample split
On a 15,000 reserve: 12,000 in an insured bank account, 2,500 in a brokerage money fund, 500 self-custodied if you use crypto at all. Adjust the last two to zero if you do not.
The rule underneath the split
The faster you need the money and the more it matters that it is there, the more of it belongs in the most protected place. Yield is the last thing to optimise for on a reserve, not the first.
ReservePath publishes general information only. Nothing here is personalised financial, tax or legal advice.
