Author Topic: Is there a better place for an oversized emergency fund?  (Read 2643 times)

greenfish

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Is there a better place for an oversized emergency fund?
« on: January 19, 2015, 01:06:50 PM »
My husband and I have an unusually large emergency fund of $30k+.

We're planning on my becoming a SAHM in the next year, and his company has been through 3 rounds of downsizing in the last 5 years, so it's sized for "what if I quit and then you get downsized" with a full year of living expenses.

Currently it's in an online "high yield" checking account earning 0.85% and I'd like it if I could move it somewhere with higher returns without risking losing the principal. Anyone have any suggestions?

GizmoTX

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Re: Is there a better place for an oversized emergency fund?
« Reply #1 on: January 19, 2015, 01:28:29 PM »
DS has a Synchrony online savings account paying about 1%.

Dalmuti

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Re: Is there a better place for an oversized emergency fund?
« Reply #2 on: January 19, 2015, 01:40:35 PM »
I have a similarly sized emergency fund and have it in CDs.  Return is higher and no risk of principal loss.  Of course, you only get the higher return if you don't end up having an emergency, so you have to estimate the probability of your scenario and do the math to see if it's actually a better choice for you.  I split mine into 3 different 5 year CD's at about 2% with staggered maturation dates, so that if we only need 4 months of expenses we can still get the full return on whichever one's we leave intact.

seattlecyclone

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Re: Is there a better place for an oversized emergency fund?
« Reply #3 on: January 19, 2015, 02:09:37 PM »
Maybe consider Series I savings bonds? They have a rate that adjusts to inflation (currently 1.48%). You can defer tax on the interest until you redeem the bond. The big downside is that you can't get your money back until one year after you purchase the bond, so you probably don't want to move more than a portion of your emergency fund over there each year.

SaintM

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Re: Is there a better place for an oversized emergency fund?
« Reply #4 on: January 19, 2015, 02:37:14 PM »
Look for checking accounts that pay high yields (3-4%) if you meet certain "qualifications." For example, Gibslandbank.com pays 4.1% on balances up to $15k (.5% after that) if you (1) elect electronic statements, (2) have at least one direct deposit or ACH each month, and (3) at least 15 debit card transactions each month. You can also have a savings account that earns 1.5% provided the checking account meets the conditions.  You get .01% in any month you fail to meet the qualifications. Gibsland is a small town bank in Louisiana, but there are more out there.

To meet the 2nd criterion, I have a small allotment from my paycheck each month going in and have the monthly interest transfer via ACH to the savings account.

To meet the 3rd criterion, I use Square Cash to transfer allowance money to my kids. A simple email debits my account and transfers the amount I select  to my kids' accounts. There is nothing stopping you from transferring the money to your current account. If you have these accounts at two banks, just send an email every day to transfer $10 back and forth.

CanuckExpat

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thedayisbrave

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Re: Is there a better place for an oversized emergency fund?
« Reply #6 on: January 19, 2015, 03:00:47 PM »
Check some local credit unions.  I have mine in a 2% APY account as long as I use my debit card 30x monthly.  To be eligible I had to join a non-profit which I think cost $10 or $15 but it was worth it to me.  There are some others in my area that are similar.

Other than that maybe CDs.  The APY is not much better though.