Author Topic: Emergency fund  (Read 1535 times)

ariapluscat

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Emergency fund
« on: October 03, 2016, 01:09:09 PM »
I have about 3 months worth of expenses saved up ($5000) and sitting in a savings account with Annual Percentage Yield : 0.03%. I would like to continue to add to this amount, probably until I have 6-9 months expenses saved up.

Is there a better way to store this money for unlikely but easy access? I would like a higher interest rate, but I don't want it tied up in investment since it's emergency money.

Would a CD account be a good fit? Or a different kind of savings account?

Should I revisit this when I have more saved? If so, how much?

Apologies if this is a beginner question.

NoStacheOhio

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Re: Emergency fund
« Reply #1 on: October 03, 2016, 01:27:19 PM »
Try an online-only bank with a high yield savings account. It's just a vanilla, FDIC-insured savings account, but pays more interest.

I'm with Captial One 360, but there are a ton of options (Schwab, Ally, Simple, etc). I have a checking account with them too that I basically just keep empty, but it's there with a MasterCard debit card for unexpected transfers with immediate availability.

frugaliknowit

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Re: Emergency fund
« Reply #2 on: October 03, 2016, 02:08:29 PM »

Jaguar Paw

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Re: Emergency fund
« Reply #3 on: October 03, 2016, 02:11:27 PM »
I started a thread a while ago about how I took 20k from my emergency fund and put it into a vanguard account. It's easy to get the money out of and makes me money over time. It boils down to job security, and slight risk tolerance.

neo von retorch

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Re: Emergency fund
« Reply #4 on: October 03, 2016, 02:23:10 PM »
I started a thread a while ago about how I took 20k from my emergency fund and put it into a vanguard account. It's easy to get the money out of and makes me money over time. It boils down to job security, and slight risk tolerance.

I think this can work if you a) have high job security, even if national/global finance might go through rough patches, b) have a well-paid/job secure spouse and/or have a high risk tolerance. As a single earner, the risk here is much higher. If the nation's economy were to go through a rough patch... that resulted in your job loss, you'd be hitting your emergency fund at the same time the value is much lower than your original investment.

(An additional option is to keep that money invested if you have enough credit available to ride through the roughest patches before making investment withdraws.)

nereo

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Re: Emergency fund
« Reply #5 on: October 03, 2016, 02:33:07 PM »
I started a thread a while ago about how I took 20k from my emergency fund and put it into a vanguard account. It's easy to get the money out of and makes me money over time. It boils down to job security, and slight risk tolerance.

I think this can work if you a) have high job security, even if national/global finance might go through rough patches, b) have a well-paid/job secure spouse and/or have a high risk tolerance. As a single earner, the risk here is much higher. If the nation's economy were to go through a rough patch... that resulted in your job loss, you'd be hitting your emergency fund at the same time the value is much lower than your original investment.

(An additional option is to keep that money invested if you have enough credit available to ride through the roughest patches before making investment withdraws.)

I'll add that if you are with Vanguard you can open one of their Vanguard Money Market Accounts - at 0.62% it's not fantastic, but better than your 0.03% yield.  It's about as risk-free as you are going to get and gives you pretty fast access (a day or so to complete a transfer into your bank account).