Where do you keep your Emergency Fund?

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TexMexIndex
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Where do you keep your Emergency Fund?

Post by TexMexIndex » Tue Jul 10, 2018 3:49 am

Is there a better place to store it than in a Vanguard Money Market Fund?

I just want to park it, don't want to have to move it multiple times.

Also I get the idea that its important to have one but often struggle with locking up that large amount of money
in such a low return. I have a 3 month fund because I have a stable career, am well insured, etc. I'll add a little more for an upcoming horizon
like when a car is getting old or a move is coming.


What do you do with your emergency fund?

mancich
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Re: Where do you keep your Emergency Fund?

Post by mancich » Tue Jul 10, 2018 5:25 am

In an online savings account. I suggest Ally Bank. It is currently earning 1.75%.

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blaugranamd
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Re: Where do you keep your Emergency Fund?

Post by blaugranamd » Tue Jul 10, 2018 5:27 am

VMMXX is paying out about 2% you won't find much better options without taking on some kind of extra risk. There's plenty of other essentially equivocal options too. But you're splitting hairs over things paying differences in the $10-100/year range depending on your e fund size.
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ny_rn
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Re: Where do you keep your Emergency Fund?

Post by ny_rn » Tue Jul 10, 2018 5:34 am

I have approximately one year of cash in a online savings account (Capital One 360). It is easily accessible and that's how I like it. Don't stress it.

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Re: Where do you keep your Emergency Fund?

Post by oldcomputerguy » Tue Jul 10, 2018 5:58 am

We have $1k in cash stashed in our safe at home for immediate availability and the rest at Ally. I have my credit cards linked to Ally so that they can be paid from there if necessary. I figure this is a good balance between return and liquidity.
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neilpilot
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Re: Where do you keep your Emergency Fund?

Post by neilpilot » Tue Jul 10, 2018 6:02 am

If I felt the need to have an EF with a significant amount of cash, I'd use an online bank MM fund or a no penalty CD at Ally. However, I don't maintain a separate EF since I consider my taxable retirement account assets sufficiently liquid.

moehoward
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Re: Where do you keep your Emergency Fund?

Post by moehoward » Tue Jul 10, 2018 7:01 am

I have a large amount in iBonds for emergencies. I've been buying them since the 90s so except for my purchases in the last 5 years, there is absolutely no restrictions on withdrawals. I tested a withdrawal and had money in my checking account within 24 hours.

LawyersGunsAndMoney
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Re: Where do you keep your Emergency Fund?

Post by LawyersGunsAndMoney » Tue Jul 10, 2018 7:03 am

Our currently sits online at Marcus (formerly Goldman Sachs online bank) and is divided between a true "emergency" fund and things like a fund for expected car maintenance.

That said, for the period 2010 until about 2016 when I got married I had the majority of my emergency fund in VTSAX. Thinking at the time was that I wanted extra returns and was willing to take risk, had a stable job that made it thru the financial crisis, and a lifeline to affluent parents if things went badly.

Bacchus01
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Re: Where do you keep your Emergency Fund?

Post by Bacchus01 » Tue Jul 10, 2018 7:21 am

ROTH IRA
HSA
Ally Savings
Credit Cards

We could live for 3 years on that

mbasherp
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Re: Where do you keep your Emergency Fund?

Post by mbasherp » Tue Jul 10, 2018 8:24 am

5k in Discover Savings (1.75%). ACH completes to my checking account the same day and I can't imagine needing more than 5k within 1 day.
2.5 months expenses currently in I Bonds, adding more every 6 months. (2.22%+)
Remainder of emergency fund + sinking fund for new HVAC is in VMMXX, Vanguard Prime Money Market (2.04%). This also funds the I bond purchases.

My long term plan is to keep 5-10k easily accessible, and the remainder of 6 months expenses in I Bonds. Set it and forget it.

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ruralavalon
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Re: Where do you keep your Emergency Fund?

Post by ruralavalon » Tue Jul 10, 2018 8:29 am

TexMexIndex wrote:
Tue Jul 10, 2018 3:49 am
Is there a better place to store it than in a Vanguard Money Market Fund?

I just want to park it, don't want to have to move it multiple times.

Also I get the idea that its important to have one but often struggle with locking up that large amount of money
in such a low return. I have a 3 month fund because I have a stable career, am well insured, etc. I'll add a little more for an upcoming horizon
like when a car is getting old or a move is coming.


What do you do with your emergency fund?
Age 72, retired, with no dedicated emergency fund.

We previously used Vanguard Prime Money Market Fund (VMMXX) current SEC Yield = 2.04%.
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ThePrince
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Re: Where do you keep your Emergency Fund?

Post by ThePrince » Tue Jul 10, 2018 8:32 am

VSBSX: Vanguard Admiral Short Term Treasury Index Fund. Right now the SEC Yield is 2.48%.

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Index Fan
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Re: Where do you keep your Emergency Fund?

Post by Index Fan » Tue Jul 10, 2018 8:35 am

Ally Bank. I used to use the Vanguard MM Fund and that's fine, but online savings accounts are FDIC insured which is a bit of an advantage for money that's supposed to be 'safe'.
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Paul78
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Re: Where do you keep your Emergency Fund?

Post by Paul78 » Tue Jul 10, 2018 8:43 am

My Vanguard taxable account (the international portion of my portfolio). I understand that is not the safest place to keep it but at is currently stands I have 2 years worth of expenses in it (that is assuming I MAKE zero lifestyle changes if I get fired) so even if it goes down by 50% I still have a years worth of expenses.

For 5k or less emergencies I can just strategically place it on my credit card that is the nearest to the start of the statement period and likely pay if off before the credit card payment is due (ie if you put it on the card on day one of the statement period the money is not actually due until basically two months latter). I can then take my excess money and also cut back a little bit to pay that 5k over two months.

bh7785
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Re: Where do you keep your Emergency Fund?

Post by bh7785 » Tue Jul 10, 2018 8:56 am

ThePrince wrote:
Tue Jul 10, 2018 8:32 am
VSBSX: Vanguard Admiral Short Term Treasury Index Fund. Right now the SEC Yield is 2.48%.
Pardon my naivety, but the SEC Yield means that this fund will pay approximately 2.48% per year in dividends/interest, but this fund is still susceptible to the volatility of the market (its value could go up or down)?

UpperNwGuy
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Re: Where do you keep your Emergency Fund?

Post by UpperNwGuy » Tue Jul 10, 2018 9:21 am

I vote for the Vanguard money market funds.

SagaciousTraveler
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Re: Where do you keep your Emergency Fund?

Post by SagaciousTraveler » Tue Jul 10, 2018 9:23 am

UpperNwGuy wrote:
Tue Jul 10, 2018 9:21 am
I vote for the Vanguard money market funds.
+1

22twain
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Re: Where do you keep your Emergency Fund?

Post by 22twain » Tue Jul 10, 2018 9:28 am

bh7785 wrote:
Tue Jul 10, 2018 8:56 am
ThePrince wrote:
Tue Jul 10, 2018 8:32 am
VSBSX: Vanguard Admiral Short Term Treasury Index Fund. Right now the SEC Yield is 2.48%.
Pardon my naivety, but the SEC Yield means that this fund will pay approximately 2.48% per year in dividends/interest, but this fund is still susceptible to the volatility of the market (its value could go up or down)?
How much does that fund's NAV actually fluctuate?
My investing princiPLEs do not include absolutely preserving princiPAL.

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9-5 Suited
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Re: Where do you keep your Emergency Fund?

Post by 9-5 Suited » Tue Jul 10, 2018 12:19 pm

It's a very liberating thing to realize that an 'emergency fund' doesn't really exist except as the outcome of a mental accounting process.

What everyone has is (1) an asset allocation that includes all of their assets and (2) a certain need for liquidity to account for running their day-to-day life across a range of scenarios.

So if your taxable account reaches ~2x the value of your would-be cash emergency fund, you can have it entirely in equities and have (2) above covered just the same as the person with cash (or go to 3x if you are really a nervous person). Then you are free to invest in whatever fixed income makes sense for your situation and you aren't constrained to low yielding savings accounts unless you prefer them.

Jack FFR1846
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Re: Where do you keep your Emergency Fund?

Post by Jack FFR1846 » Tue Jul 10, 2018 1:57 pm

$35k in a 2% Redneck Bank megamoney account
Next in CIT bank at 1.85 savings
$4k in 4 savings accounts at DCU at 5.12%
$360k in US Savings bonds
$5k in DCU money market account at 1%
Enough with margin in my checking account.
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John151
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Re: Where do you keep your Emergency Fund?

Post by John151 » Tue Jul 10, 2018 9:43 pm

A Vanguard money market fund. For backup, I have a tax-exempt bond fund.

JonSnow
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Re: Where do you keep your Emergency Fund?

Post by JonSnow » Tue Jul 10, 2018 9:46 pm

online MM account, mines @ 1.75%

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Nicolas
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Re: Where do you keep your Emergency Fund?

Post by Nicolas » Tue Jul 10, 2018 9:55 pm

I keep mine in a high-yield online savings account at Synchrony Bank which is FDIC-insured and pays a higher interest rate than Ally Bank.

Dottie57
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Re: Where do you keep your Emergency Fund?

Post by Dottie57 » Tue Jul 10, 2018 9:59 pm

Money market at bank.

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Sandtrap
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Re: Where do you keep your Emergency Fund?

Post by Sandtrap » Tue Jul 10, 2018 10:03 pm

Vanguard VMMX, Fed Prime, Short term brokered CD's, Brick n Mortar . . . Tomato Can in a safe place. :D
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radiowave
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Re: Where do you keep your Emergency Fund?

Post by radiowave » Tue Jul 10, 2018 10:24 pm

1. high yield savings account and CDs (short term 1-2 yrs)
2. T-Bills in a brokerage account (1 yr or less)
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digit8
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Re: Where do you keep your Emergency Fund?

Post by digit8 » Wed Jul 11, 2018 9:20 am

I keep way more than I should in my rewards checking which is my real "sleep at night" money. But for purely emergency funds, I have two buckets- cash goes to Vanguard Federal Money Market once a month. I eyeball the balance every quarter or so and if it feels a little overstuffed I move a piece of it to my taxable TSM fund.
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ofcmetz
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Re: Where do you keep your Emergency Fund?

Post by ofcmetz » Wed Jul 11, 2018 9:26 am

I keep mine in my Credit Union and in an online savings account. I do think keeping it in a money market fund at Vanguard is perfectly fine though.
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scrabbler1
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Re: Where do you keep your Emergency Fund?

Post by scrabbler1 » Wed Jul 11, 2018 1:32 pm

My first-tier EF is an extra $500 in my local bank's checking account (0% interest) beyond the minimum balance to avoid monthly account fees. It is very liquid and easily accessible to cover small, unforeseen expenses. My second tier EF is $40k in an intermediate-term muni bond fund. It earns about 2-2.5%, mostly tax free, and the fund has checkwriting privileges, giving it added accessibility. I rarely have to tap into this fund, on average not even once a year in the 25 years I have been in the fund.

stocknoob4111
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Re: Where do you keep your Emergency Fund?

Post by stocknoob4111 » Wed Jul 11, 2018 1:43 pm

I have mine in VMMXX although with inflation running at 2.5% and paying 33% taxes it's losing money.

SEAworld9
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Re: Where do you keep your Emergency Fund?

Post by SEAworld9 » Wed Jul 11, 2018 2:51 pm

Jack FFR1846 wrote:
Tue Jul 10, 2018 1:57 pm
$35k in a 2% Redneck Bank megamoney account
Next in CIT bank at 1.85 savings
$4k in 4 savings accounts at DCU at 5.12%
$360k in US Savings bonds
$5k in DCU money market account at 1%
Enough with margin in my checking account.
we have many of the same accounts. limits on the redneck/all america account went up to $50k a few months ago so you can shift more there if desird.

i also didn't know it was possible to have more than one DCU savings account (i have $1k in 1 account at 5.12%).

Beth*
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Re: Where do you keep your Emergency Fund?

Post by Beth* » Wed Jul 11, 2018 8:11 pm

I keep cash in a savings account at Ally Bank which is currently paying 1.75% interest. That's my first tier emergency fund.

UniversityEmployee9
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Re: Where do you keep your Emergency Fund?

Post by UniversityEmployee9 » Wed Jul 11, 2018 8:19 pm

Cash.
Alliant Credit Union (online credit union, similar to Ally or Capital One 360, better customer service and better rate on checking as well).
HSAs.
Roth IRAs.

Charon
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Re: Where do you keep your Emergency Fund?

Post by Charon » Wed Jul 11, 2018 11:29 pm

5-year CD at my local credit union (3%). I'm interested that nearly everyone seems to keep their emergency funds in accounts that are immediately accessible with no penalty. I think a small penalty for accessing is actually a good idea - it keeps you from accessing the money for anything other than an emergency!

jh-1391
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Re: Where do you keep your Emergency Fund?

Post by jh-1391 » Thu Jul 12, 2018 5:27 am

Some in checking to stay above minimum balance requirements
Then a HYSA
The rest in I bonds

3funder
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Re: Where do you keep your Emergency Fund?

Post by 3funder » Thu Jul 12, 2018 7:33 am

Capital One 360 Money Market Account.

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ruralavalon
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Re: Where do you keep your Emergency Fund?

Post by ruralavalon » Thu Jul 12, 2018 9:53 am

Charon wrote:
Wed Jul 11, 2018 11:29 pm
5-year CD at my local credit union (3%). I'm interested that nearly everyone seems to keep their emergency funds in accounts that are immediately accessible with no penalty. I think a small penalty for accessing is actually a good idea - it keeps you from accessing the money for anything other than an emergency!
That's an interesting idea, worth considering.
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kaeltor
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Re: Where do you keep your Emergency Fund?

Post by kaeltor » Thu Jul 12, 2018 12:02 pm

scrabbler1 wrote:
Wed Jul 11, 2018 1:32 pm
My first-tier EF is an extra $500 in my local bank's checking account (0% interest) beyond the minimum balance to avoid monthly account fees. It is very liquid and easily accessible to cover small, unforeseen expenses. My second tier EF is $40k in an intermediate-term muni bond fund. It earns about 2-2.5%, mostly tax free, and the fund has checkwriting privileges, giving it added accessibility. I rarely have to tap into this fund, on average not even once a year in the 25 years I have been in the fund.
That Muni fund is kept where again? Does vanguard have a similar one?

bh7785
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Re: Where do you keep your Emergency Fund?

Post by bh7785 » Thu Jul 12, 2018 12:46 pm

Redneck bank 2%, where bankin's funner.

AlwaysaQ
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Re: Where do you keep your Emergency Fund?

Post by AlwaysaQ » Thu Jul 12, 2018 1:07 pm

Planned home improvement expenses and some excess in HY savings account at an online bank.

guyesmith
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Re: Where do you keep your Emergency Fund?

Post by guyesmith » Thu Jul 12, 2018 1:43 pm

TexMexIndex wrote:
Tue Jul 10, 2018 3:49 am
Is there a better place to store it than in a Vanguard Money Market Fund?

I just want to park it, don't want to have to move it multiple times.

...

What do you do with your emergency fund?
To answer your question based on your preference, no. I have my emergency fund in a Vanguard State Tax-exempt Money Market Fund (PA).

biturbo
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Re: Where do you keep your Emergency Fund?

Post by biturbo » Thu Jul 12, 2018 2:05 pm

We use credit cards for virtually everything, which means I always know (within a few dollars) how much money is going out the next month. So, I start every month with that much in checking, which means I usually have 1+ months sitting in checking. I also set aside money every month for bigger, regular things like car insurance/registration, so months tend to be relatively smooth.

Then, I keep 2-3 months in an Ally savings account. I know there are banks that pay higher interest right now, but they are generally toward the high end and work pretty well for us, and I'm getting too lazy to chase bonuses/max interest rates.

Finally, I keep 2-3 months in Vanguard bond funds, for a little bit higher return. I will probably start shifting some of this to stocks as we build up more in our emergency fund, in order to better keep up with inflation.

I know a lot of people treat emergency funds just as a normal part of their overall asset allocation and don't necessarily keep dedicated accounts for them - I definitely understand the logic behind this, but for us, having a dedicated pool of money explicitly set aside for emergencies is very psychologically comforting for us and we probably will keep doing it this way.

scrabbler1
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Re: Where do you keep your Emergency Fund?

Post by scrabbler1 » Thu Jul 12, 2018 3:36 pm

kaeltor wrote:
Thu Jul 12, 2018 12:02 pm
scrabbler1 wrote:
Wed Jul 11, 2018 1:32 pm
My first-tier EF is an extra $500 in my local bank's checking account (0% interest) beyond the minimum balance to avoid monthly account fees. It is very liquid and easily accessible to cover small, unforeseen expenses. My second tier EF is $40k in an intermediate-term muni bond fund. It earns about 2-2.5%, mostly tax free, and the fund has checkwriting privileges, giving it added accessibility. I rarely have to tap into this fund, on average not even once a year in the 25 years I have been in the fund.
That Muni fund is kept where again? Does vanguard have a similar one?
It's with Dreyfus. I don't know if Vanguard has one, they probably do because it's a pretty generic national fund.

kaeltor
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Re: Where do you keep your Emergency Fund?

Post by kaeltor » Thu Jul 12, 2018 4:29 pm

scrabbler1 wrote:
Thu Jul 12, 2018 3:36 pm
kaeltor wrote:
Thu Jul 12, 2018 12:02 pm
scrabbler1 wrote:
Wed Jul 11, 2018 1:32 pm
My first-tier EF is an extra $500 in my local bank's checking account (0% interest) beyond the minimum balance to avoid monthly account fees. It is very liquid and easily accessible to cover small, unforeseen expenses. My second tier EF is $40k in an intermediate-term muni bond fund. It earns about 2-2.5%, mostly tax free, and the fund has checkwriting privileges, giving it added accessibility. I rarely have to tap into this fund, on average not even once a year in the 25 years I have been in the fund.
That Muni fund is kept where again? Does vanguard have a similar one?
It's with Dreyfus. I don't know if Vanguard has one, they probably do because it's a pretty generic national fund.
So growth is tax free, but if I were to cash out the bond fund, would taxes be applied?

scrabbler1
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Re: Where do you keep your Emergency Fund?

Post by scrabbler1 » Thu Jul 12, 2018 4:50 pm

kaeltor wrote:
Thu Jul 12, 2018 4:29 pm
scrabbler1 wrote:
Thu Jul 12, 2018 3:36 pm
kaeltor wrote:
Thu Jul 12, 2018 12:02 pm
scrabbler1 wrote:
Wed Jul 11, 2018 1:32 pm
My first-tier EF is an extra $500 in my local bank's checking account (0% interest) beyond the minimum balance to avoid monthly account fees. It is very liquid and easily accessible to cover small, unforeseen expenses. My second tier EF is $40k in an intermediate-term muni bond fund. It earns about 2-2.5%, mostly tax free, and the fund has checkwriting privileges, giving it added accessibility. I rarely have to tap into this fund, on average not even once a year in the 25 years I have been in the fund.
That Muni fund is kept where again? Does vanguard have a similar one?
It's with Dreyfus. I don't know if Vanguard has one, they probably do because it's a pretty generic national fund.
So growth is tax free, but if I were to cash out the bond fund, would taxes be applied?
You would pay income taxes on any gain in the value of the shares you have bought (outright or through dividend reinvestment) when you sell those shares. You would not pay federal income taxes on the monthly dividends. You would pay state income taxes on the portion of the bonds within the fund not invested in your home state, which means most of the monthly dividends would be subject to state income taxes. Bond funds like these don't pay much, if anything, in cap gain distributions (which are subject to federal and state income taxes). And bond funds like these have some fluctuation in price, but not a lot.

MnD
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Re: Where do you keep your Emergency Fund?

Post by MnD » Thu Jul 12, 2018 6:47 pm

32 years now in a taxable brokerage account 100% stock funded from 1987-1990 till it was around $70K and never added a dime after that. Regarding your concern about locking locking up large amounts of money at low returns that's what we seeked to avoid. Our unsafe emergency fund has generated a few hundreds of thousands over the decades. Of course we've handled plenty of minor emergencies with credit card float - 60 days if the billing cycle lines up with the minor emergency. Never used it as such - but a inherited IRA of equity and bonds would work in an emergency if we needed it. Taxable sure but in an emergency being able to write yourself an themselves an extra paycheck or 10 comes in handy.

And then we have the real retirement accounts with a mix of equity and fixed incomes. When we would hit the taxable account for emergencies, needs, wants or extras it's really easy to sell a corresponding amount of safe funds in retirement accounts and buy stocks. Bottom line you haven't really sold any stocks unless you want to, such as needing to bankroll a new roof or getting a car totaled towards the end of a raging bull market - which does happen.

Once you have enough overall and enough outside retirement accounts to avoid penalties - its all just mental accounting and a drain on returns to have these "lockboxes of cash" scattered around.

Dude2
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Re: Where do you keep your Emergency Fund?

Post by Dude2 » Fri Jul 13, 2018 12:21 am

ruralavalon wrote:
Thu Jul 12, 2018 9:53 am
Charon wrote:
Wed Jul 11, 2018 11:29 pm
5-year CD at my local credit union (3%). I'm interested that nearly everyone seems to keep their emergency funds in accounts that are immediately accessible with no penalty. I think a small penalty for accessing is actually a good idea - it keeps you from accessing the money for anything other than an emergency!
That's an interesting idea, worth considering.
I go a step further with it. I have a 7-year CD ladder at my credit union. The idea is that each year "x" dollars will mature, and I would not have to pay a penalty to get that money. I also keep "x" in money market (because it may take some portion of the calendar year to wait for the CD's to mature). In other words, it's essentially an 8 year emergency fund, 1 year's worth in MM and 7 years worth in CD's. Yes, I do hate paying the tax on the interest, but I'm still doing better this way than if it were in a municipal bond fund. Plus it is FDIC insured and less risky.

Charon
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Re: Where do you keep your Emergency Fund?

Post by Charon » Wed Jul 18, 2018 8:01 pm

Dude2 wrote:
Fri Jul 13, 2018 12:21 am
I go a step further with it. I have a 7-year CD ladder at my credit union. The idea is that each year "x" dollars will mature, and I would not have to pay a penalty to get that money.
When I joined BH earlier this year I learned about laddering, was very tempted by it, but then thought about it and realized it didn't make sense for me.

I kind of inadvertently do this (have two CDs right now with maturation dates a few years apart), but not on purpose. I don't really get laddering. If interest rates were 20%, the 6-month penalty for breaking a CD might matter to me even in an emergency. But at 3%? Paying 1.5% penalty makes no real difference in my ability to deal with an emergency, but it's enough to remove any temptation to touch the money for non-emergency purposes.

Dude2
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Re: Where do you keep your Emergency Fund?

Post by Dude2 » Thu Jul 19, 2018 11:12 am

The beauty of the ladder is having something always maturing that you can access penalty free. If you don't need it, it just rolls over, and you keep all the CD's at the highest paying interest end of the spectrum. If rates rise, your newly maturing instruments catch the rising rates. It's on autopilot, and I only have to tap it if I have to.

In general, I don't think anybody here at BH's has any heartburn with folks keeping emergency funds in CD's.

missingdonut
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Re: Where do you keep your Emergency Fund?

Post by missingdonut » Thu Jul 19, 2018 11:34 am

Tier 1, about two months' worth, is held at my local credit union.
Tier 2, about three months' worth, is held in Capital One 360 savings
Tier 3, about two months' worth, is in Vanguard Prime Money Market along with $500/mo to fund my 2019 Roth IRA.
Tier 4, several years' worth, Roth IRA
Tier 5, I'll be panhandling, so in your wallet :twisted:

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