I thought I'd earn more by keeping my money in the stock market than a savings account, but I couldn't have been more wrong

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• I've always dreamed of visiting Italy, and after years of saving, I finally had enough.
• But when the pandemic hit, I put off my trip, and my travel fund sat in a high-yield savings account.
• With interest rates low, I thought I'd earn more by investing in the market. I was wrong.

For most of my life, I have dreamed of going to Italy.

When I was a child, my dad would show me slideshows (the old carousel kind) from his two-year church mission and business trips there. The sculptures, frescoes, and breathtaking architecture enchanted me. I read "The Agony and the Ecstasy" and studied the Renaissance in European history in my junior year of high school, and I was completely hooked — Italy was at the top of my bucket list.

I didn't actually start saving for the trip until I was 35. My family was in dire financial straits at the time, but I looked around me one day and realized that if I didn't start saving money for this long-held goal, I'd die someday having dreamed of Italy but never gone. That thought was terrifying. So I found an old coffee can, plunked some loose change into it, and labeled it "Italy fund." 

Soon after that, we moved to Texas to a new job with a lot more stability. Things started looking up financially, and a few years after the first coins went into the coffee can, I was able to squirrel away about $1,200 and nearly enough airline and hotel points to get my husband and me to Italy. 

By this time, my Italy fund had graduated from the coffee can to an online high-yield savings account. It was earning the highest interest rate of any savings account I could find at the time — a whopping 1.05%. 

The itinerary was planned, dates picked, and childcare arranged. Then the pandemic hit.

I moved my travel money to the stock market, hoping to earn more

When news came out about how bad COVID-19 numbers were in Italy, my husband and I tabled the trip, hoping to make it in 2021. As time wore on, lockdowns and restrictions stayed firmly in place, and I knew it would be quite some time before I would be comfortable traveling internationally.

While I continued to sit in my pent-up wanderlust, I watched the stock market climb to unprecedented levels. My IRA grew by leaps and bounds while my Italy fund sat sad and unused in my savings account.

Then financial FOMO began to set in. I thought to myself, "This is stupid. Why not put my Italy fund in a brokerage account and get the double-digit returns I can in the stock market instead of 1% in a 'high-yield' savings account? If I do that, I'll have way more money to spend on gelato once the pandemic lifts." It made perfect sense at the time, but I soon came to realize how short-sighted that decision was. 

I transferred the contents of my high-yield savings account to a brokerage account and bought several of the stocks and ETFs that had been riding high during the pandemic: Tesla, Pinterest, and tech-focused ARK funds. (I'm cringing as I write this.)

I lost money when the stock market started tanking

Once COVID-19 restrictions began to ease, I began researching flights and hotels to make travel plans again. But I looked in my brokerage account, and now I had less than half the money I'd started with. Tech stocks took a beating after the pandemic, and that's where I'd put most of my savings. Between February 2021 and October 2022, I'd lost $665. That's a lot of gelato. 

I'd made the rookie mistake of putting short-term savings into long-term savings vehicles. I was raised by options-trading parents, and I'm a personal finance writer by trade, so I have no good excuses for this. I knew better than to put my vacation money — money I knew I'd be spending in the next two or three years, max — into growth stocks that are designed to be held for at least five years. I made a rash decision based on the two emotions you should never listen to when investing: greed and fear.

I'm now faced with the uncomfortable choice of selling my securities (ones I truly believe will do well in the coming years) and cutting my losses or risking watching my Italy fund dwindle further. I'm still not sure which poison I'm going to pick.

Despite the rising interest rates, so-called high-yield savings accounts look only mildly more attractive than they did two years ago. The same online bank I used now offers higher interest on savings, though some of those gains are dwarfed by inflation.

But high-yield savings accounts have one critical advantage — they don't lose money. I may not make double-digit returns, but I won't lose them either. And not losing is much more important than winning for short-term savings.

Despite the small returns, I'll definitely be using a high-yield savings account for all future Italy savings. At least it's an upgrade from the coffee can.

This article was originally published in October 2022.