Emergency fund - in Prime Money Market?

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Emergency fund - in Prime Money Market?

Postby BobbyJoe » Sun Mar 19, 2017 8:28 pm

I wondered what do people here do with their emergency fund.
Where do you put it so that it will both be affected by inflation as little as possible while also keeping it liquid?
I wondered if Prime Money Market is the most popular approach for that around here...

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Re: Emergency fund - in Prime Money Market?

Postby RDHlooking4FIRE » Sun Mar 19, 2017 8:42 pm

15k in high yield online savings account 1.05%.

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Re: Emergency fund - in Prime Money Market?

Postby Tycoon » Sun Mar 19, 2017 8:48 pm

Our emergency fund is in Vanguard's Prime Money Market fund.
...I might be just beginning | I might be near the end. Enya | | C'est la vie

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Re: Emergency fund - in Prime Money Market?

Postby avalpert » Sun Mar 19, 2017 8:58 pm

In this day and age there are better opportunities with bank checking/money market accounts making them better options for your cash fund.

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Re: Emergency fund - in Prime Money Market?

Postby Alto Astral » Sun Mar 19, 2017 9:02 pm

Nope. In CDs and high yield savings accounts. Better rates + FDIC. I would consider Prime if it put me in some Flagship tier or something with added benefits or lower ER for the rest of my funds at Vanguard

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Re: Emergency fund - in Prime Money Market?

Postby 92irish » Sun Mar 19, 2017 9:04 pm

SEC yield on Prime Money Market is now .8% and has been rising over the past months. Online bank savings accounts seem stuck around the 1.00% range. There really is not much difference now between Vanguard Prime Money Market and the majority of online savings accounts.

We'll see in the future, but my guess is that Prime Money Market will keep rising as the Fed raises interest rates and will equal (if not exceed) online savings accounts later this year. Let's hope. The online banks don't have to raise their rates when the fed does.

Bottom line is there is less compelling reason to have an online savings account now versus Vanguard prime money market account as there was when the prime money market account was yielding basically 0%. (FDIC insurance issue aside).

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Re: Emergency fund - in Prime Money Market?

Postby clown » Sun Mar 19, 2017 11:16 pm

In my view, Prime's yield is predicated upon the yields generated by the underlying securities it holds. As the fed raises rates, yields on money market instruments in general will rise, so Prime's yield will rise. Bank products are not drive by the same forces, thus need not rise.

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Re: Emergency fund - in Prime Money Market?

Postby whodidntante » Mon Mar 20, 2017 12:04 am

Don't have one, problem solved.

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