What is a Nest Egg?

Tricia Christensen
Tricia Christensen

The nest egg refers to money set aside in investment, money market, or savings accounts that is designated for some specific purpose. It may also be called a financial cushion, a safety valve, and a variety of other names. Some refer to retirement money specifically as their nest egg, and others have money set aside to later fund their children’s expenses like college, weddings or even down payments on a house.

A nest egg may be meant for retirement.
A nest egg may be meant for retirement.

In order for nest egg philosophy to work, you must agree with yourself that nest eggs aren’t touched except for their intended purpose. It also helps to set aside an amount you plan to “feather the nest” with each month. In real life, when you find a nest, you are never supposed to touch the eggs, since birds may then reject them. Your nest egg should remain safe and untouchable, allowed to grow quietly in the background until it is needed for its intended purpose.

Money set aside in a savings account for a specific purpose is a nest egg.
Money set aside in a savings account for a specific purpose is a nest egg.

It’s still important if you plan to invest your nest egg, to carefully consider the types of investments you can make. In general, you don’t want high-risk investments if you plan to invest this money, since you don’t want the balance of your nest egg to reduce. Instead, you may want to look for steady money making investments, which will increase your balance minimally, without the risk of losing the money. Bonds, savings accounts, and relatively stable mutual funds may not be the splashy potential moneymakers that quick stock or commodities purchases are, but they usually don’t lose money either.

Usually the term nest egg implies slow growth of money, securely stashed away. They don’t imply quick dabs at making huge amounts of money. In general, those investments that might make you the most amount of money also offer the highest risk.

Financial advisers don’t always agree on how much money is suitable for nest eggs. Obviously the more money you can put into one, the better. If you have significant amounts of money to invest, you may want to diversify your investments. Invest some of the money in higher risk but higher potential profit stocks, and invest some in stable moneymakers. The amount you choose to place in a nest egg really depends on how much you can invest, and what the “egg” is for. It can help to seek financial counseling to make the best decisions regarding where to safely place your money to maximize profit and minimize loss.

Some people save nest eggs for special events like honeymoons.
Some people save nest eggs for special events like honeymoons.
Tricia Christensen
Tricia Christensen

Tricia has a Literature degree from Sonoma State University and has been a frequent wiseGEEK contributor for many years. She is especially passionate about reading and writing, although her other interests include medicine, art, film, history, politics, ethics, and religion. Tricia lives in Northern California and is currently working on her first novel.

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Discussion Comments


Having to dip into your nest egg during hard times is really disappointing. I lost my job last year, and I had to spend a lot of the money I had been saving to buy a house.

Each time I took money out of it, I felt as if a little piece of me had been bitten off. This nest egg represented hope for my future, and my hope was slowly decreasing by necessity.

I found another job after about a year, and I was able to start saving again. My nest egg is only about a third of the size that it was before I lost my first job, but I have faith that it will grow enough in about a decade for me to make a sizable down payment on a home.


@feasting – I know that it is frustrating to be unable to spend that money until retirement. However, being able to save up for all those years is quite a nest egg achievement.

Some people do not have plans like this, and they are forced to save on their own. That makes it much tougher to resist the temptation to spend the money. Also, they don't have a company matching whatever they put in, and this cuts the size of the nest egg in half.

If you do live to be 65, you will be so glad that you have the money. If you want something that you can spend in the meantime, you should start a separate savings account and put a certain amount in it each week.


My nest egg is under my company's 401(k) plan. So, I can't touch it until I'm 65, which is a bit of a bummer. What if I don't even live that long?

My company will match what I put into the egg up to 15% of my income. I've been putting in 7%, and after six years with the company, I have about $10,000 in there.

I invest three equal percentages. One is in low risk, one medium risk, and one high risk. I was told that this is a good plan.

Though I have lost money in years where the economy was particularly bad, I have gained money in good years. I think it all balances out rather well.


I have a “nest egg” savings account, but the money in it is to be used only for paying taxes. However, if there is money left over after I have paid the IRS what I owe them, then it is mine to spend.

I am self-employed, so I have to take a certain percentage out of my income and stash it in the nest egg each pay period. That way, I'm not floored with debt once tax time arrives.

Last year, I had enough left in the nest egg after paying my taxes to fund most of my beach vacation. So, even though I have a better idea of how much to stash there now, I intend to stash the same percentage so that I will have that nice little extra bit again this year.

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