Author Topic: What do you guys recommend for investment of "Emergency Fund" besides Ally  (Read 5290 times)

Michael in ABQ

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Re: What do you guys recommend for investment of "Emergency Fund" besides Ally
« Reply #50 on: February 13, 2018, 08:09:41 AM »
I just transferred part of my emergency fund to Live Oak Bank ( https://www.liveoakbank.com/personal-banking/personal-savings/ ), they're paying 1.6% on a savings accounts and there's no gimmicks of minimum debit transactions or online logins to worry about.  They're an online only bank but I'm familiar with them from my regular job as they are a lender that specializes in certain types of specialized real estate like breweries, veterinary clinics, bowling alleys, etc. The kind of properties that most regular banks aren't familiar with and don't want to lend on.

An emergency fund isn't an investment, it's insurance. Insurance costs money but it's there to provide protection and peace of mind. Keeping some amount of cash liquid and not invested will cost you money due to inflation and opportunity costs but for many people the peace of mind of knowing there's $5-10k of cash that can instantly be tapped in an emergency is worth forgoing the additional return. Stick it in a decent online savings account at least offsets most of the inflation loss.
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dustinst22

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Re: What do you guys recommend for investment of "Emergency Fund" besides Ally
« Reply #51 on: February 14, 2018, 12:38:27 PM »
@dustinst22 I am also interested in CCU. Could I use their credit card to pay my other credit cards? I hardly ever use credit, so spending $1k a month would only be valuable to me if I could use it to pay my other balances that I pay off every month anyway, as well as my rent (which I currently pay in cash).

No, I don't think paying off other credit cards would be an option to hit the tier, as bonus credit cards dont allow it (essentially "manufactured spending").

That said, they still offer 3.1% up to 10 K with no credit card needed (still have other "hoops" you have to hit, though).
« Last Edit: February 14, 2018, 12:40:01 PM by dustinst22 »

COEE

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Re: What do you guys recommend for investment of "Emergency Fund" besides Ally
« Reply #52 on: February 14, 2018, 07:12:34 PM »
Another option not mentioned yet - Series I savings bonds (I bonds).  Your EF will keep up with inflation, at least, be state tax-free, and federal taxes are deferred until withdrawal (or even eliminated altogether if used for higher education).  Currently paying 2.58% (0.1% fixed rate + inflation).  Risk free, as well.

You will probably want to ladder it a bit, since the funds are not available for 1 year, and then you will pay 6 months' interest penalty if redeemed within 5 years. 

I've been moving my EF over to I bonds over the past few years, which really is just having my EF as part of the fixed income portion of my overall portfolio.

Another Ibond investor here. I'm in the process of putting about 8 months of my emergency fund in them.  Just slowly buying some every 3 months or so.  I think of it as my extended emergency fund.  I consider theseas part of my bond portfolio also.

The other 4 months is in ally.

These are massively simple.  And im not losing value to inflation.  Working for $1k on $15k investment just seems like too much work to me.

One small correction.... I think if you cash out before 5 years is complete thenyou actually lose thelast 3 months interest. Not 6. 

PDXTabs

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Re: What do you guys recommend for investment of "Emergency Fund" besides Ally
« Reply #53 on: February 14, 2018, 08:42:56 PM »
CIT Bank is marginally better at 1.55%.

Will

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Re: What do you guys recommend for investment of "Emergency Fund" besides Ally
« Reply #54 on: February 14, 2018, 09:12:12 PM »
Another option not mentioned yet - Series I savings bonds (I bonds).  Your EF will keep up with inflation, at least, be state tax-free, and federal taxes are deferred until withdrawal (or even eliminated altogether if used for higher education).  Currently paying 2.58% (0.1% fixed rate + inflation).  Risk free, as well.

You will probably want to ladder it a bit, since the funds are not available for 1 year, and then you will pay 6 months' interest penalty if redeemed within 5 years. 

I've been moving my EF over to I bonds over the past few years, which really is just having my EF as part of the fixed income portion of my overall portfolio.

Another Ibond investor here. I'm in the process of putting about 8 months of my emergency fund in them.  Just slowly buying some every 3 months or so.  I think of it as my extended emergency fund.  I consider theseas part of my bond portfolio also.

The other 4 months is in ally.

These are massively simple.  And im not losing value to inflation.  Working for $1k on $15k investment just seems like too much work to me.

One small correction.... I think if you cash out before 5 years is complete thenyou actually lose thelast 3 months interest. Not 6.

Yeah, it is 3 and not 6.

I know I Bonds would be much more attractive to me if Washington had a state tax.
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Timodeus

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Re: What do you guys recommend for investment of "Emergency Fund" besides Ally
« Reply #55 on: February 15, 2018, 06:44:20 AM »
I keep a third at Ally, a third in CDs (CD Ladder), and a third in US Savings Bonds. Savings Bonds are underrated probably because we've had such low interest rates and low inflation their yields have been decimated. With both increasing, savings bonds are looking more attractive.

Wayward

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Re: What do you guys recommend for investment of "Emergency Fund" besides Ally
« Reply #56 on: February 15, 2018, 06:58:35 AM »
Insight card - 5% on $5,000.  If you have a SO, you can easily do 2 accounts.  More info here: https://www.doctorofcredit.com/insight-5-apy-prepaid-card-5000/
+1 for this.  It involves some upfront work to set up, but you can have multiple NetSpend/Insight accounts per person. Link in my signature for more information. If you do it make sure you read that article in full or PM me for how to avoid all fees!
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ChpBstrd

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Re: What do you guys recommend for investment of "Emergency Fund" besides Ally
« Reply #57 on: February 15, 2018, 07:24:52 PM »
My checking account at a small local bank earns 2.25%, has no annual fee, offers ATM refunds nationwide, has free online bill pay, AND is FDIC insured. I keep less than 10k there. Some people aren't earning that on a CD, which is not liquid.

If the SHTF and I needed even more money, I have access to tens of thousands of dollars via credit cards, some with 2% cash back rewards. I could access these funds during the 3-5 days until the ACH transfer from my brokerage came through and pay it off the next month.

I also keep several hundred in cash in a hiding place, but that's mostly in the rare case I find a Craigslist bargain and must rush out the door!

If I'm physically incapacitated, I have short-term disability insurance through work.

If I'm physically dead, my dependents have life insurance.