Where should I keep $15K in cash?

[charis]

We have had what is, essentially, a EF of $15K cash sitting in CDs or savings for years now (earning average of 1%) 

In addition for emergencies, we have a $27K HELOC (plus $90K+ in available credit card lines).

We are maxing out our available retirement accounts.  For debts, we have a mortgage and significant SL debt ($101k - all but 18K on track to be forgiven in 6 years).

Should I keep the money in a 1% savings account?  I vigorously researched higher yield savings accounts, but nothing that I found was feasible.  Is there another safe investment option that I am missing?

[ShoulderThingThatGoesUp]

Short answer is, you shouldn't.

[charis]

Ok, anyone want to elaborate on that?

[Exflyboy]

Well I would say 1% on a cash account that gives you pretty instant access is a pretty good deal.

You have to have 3 to 6 months of emergency fund and I know I'm not getting 1% on my cash!

Frank

[ShoulderThingThatGoesUp]

It's hard to imagine anything going wrong that would make you need that much available in less than a week, especially given your $27k HELOC available. Pay down debt or invest, depending on interest rates.

[rocketman48097]

I used to have this problem as well, we regularly would amass 20k or more in a low interest savings account.  My solution was to invest more into our PG account through computershare DRIP, which does not have fees.  The stock also pays dividends.  This is not a risky stock because it's a consumer stock, and as such, does not decline as much in market downturns as other stocks do.  We are now down, after convincing my wife for many years, to 6k in savings.  However, we have amassed 64k in our PG investment account.  It's taxable, but you only pay capital gains when you sell, and the dividends are small and taxed at 0% if you are in the 15% federal tax bracket.

We also recently opened up a sharebuilder account, and invested 7k in AAPL stock.  This also pays a nice dividend.  My advice would be not to live in fear, and sell your stocks if you should lose your job and run out of all other sources first, such as:

1. savings
2. severance pay
3.  unemployment benefits

[jackiechiles2]

I used to have this problem as well, we regularly would amass 20k or more in a low interest savings account.  My solution was to invest more into our PG account through computershare DRIP, which does not have fees.  The stock also pays dividends.  This is not a risky stock because it's a consumer stock, and as such, does not decline as much in market downturns as other stocks do.  We are now down, after convincing my wife for many years, to 6k in savings.  However, we have amassed 64k in our PG investment account.  It's taxable, but you only pay capital gains when you sell, and the dividends are small and taxed at 0% if you are in the 15% federal tax bracket.

We also recently opened up a sharebuilder account, and invested 7k in AAPL stock.  This also pays a nice dividend.  My advice would be not to live in fear, and sell your stocks if you should lose your job and run out of all other sources first, such as:

1. savings
2. severance pay
3.  unemployment benefits

Only difficulty with sharebuilder is you pay $$ to put the money in and then again to get it out.   I've got a robinhood invite if you want one to eliminate the transaction fee.

[rocketman48097]

I understand, but I don't think a $7 limit order fee on a 7k investment is excessive, as I plan on holding these AAPl shares a very long time.  When you do the math, transaction fees are very low, with limited trading, vs. a managed mutual fund that might charge 0.50% per year.  On a 7k balance, that would be an expense of $35 per year, far more than what we paid to buy, and who knows what year we will sell?  We regularly hold stocks five years or longer. 

[themagicman]

You need to check out lake Michigan Credit union's checking account. I have one and they pay 3% up to $15,000 all you have to do is make 10 debit card purchases (I just pay my comcast bill ten times at $1 or so each, and you have to have a direct deposit or incoming ACH (Of any amount)

Easy to get the requirements and you cannot beat that rate!

[MustachianAccountant]

You need to check out lake Michigan Credit union's checking account. I have one and they pay 3% up to $15,000 all you have to do is make 10 debit card purchases (I just pay my comcast bill ten times at $1 or so each, and you have to have a direct deposit or incoming ACH (Of any amount)

Easy to get the requirements and you cannot beat that rate!

The PayPal Prepaid Debit card has a linked savings account that pays 5% on up to $5,000.
The Debit card account does have a $4.95/month fee, but the interest easily wipes that out, if you have the full $5,000 in there.

[charis]

Thanks for the responses!  I am leaning toward keeping have the cash in a 1% online saving account and half in a 1.29% 2-yr CD with Ally (60-day interest penalty for early withdrawal).  So basically what I have been doing. But I will invest anything above 15K.

I have checked out all of the debit card/higher yield account options, but I have no interest in trying to make a certain number of debit card purchases a month. 

[RunHappy]

For what its worth.  I have my emergency cash (almost $15k) in 1% savings account.  For me it was comfort level.  I wanted my cash "close by" and with easy access to it.