Wheres best place park emergency funds these days?

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CodeMaster
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Wheres best place park emergency funds these days?

Post by CodeMaster » Thu Nov 14, 2019 2:29 pm

Was wondering wheres best place park emergency funds these days with best interest rate / any deals?

Truly appreciate any tips! :sharebeer :beer
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Jack FFR1846
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Re: Wheres best place park emergency funds these days?

Post by Jack FFR1846 » Thu Nov 14, 2019 2:34 pm

May not be the absolute best....because who pays the most changes often....but I use Redneck Bank. Currently 2.25% up to $50k. I've been happy with them.
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fujiters
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Re: Wheres best place park emergency funds these days?

Post by fujiters » Thu Nov 14, 2019 2:45 pm

Doctor of Credit keeps an updated list of high interest accounts here: https://www.doctorofcredit.com/high-int ... gs-to-get/

I like I bonds. Taxes are deferred on the interest until redemption (up up 30 years). No state taxes. Guaranteed to maintain spending power. Currently yielding 2.22%. You must hold them at least 1 year though (and you lose 3 months interest if held less than 5 years), so only good as an emergency fund 1+ years from now if you buy now.
“The purpose of the margin of safety is to render the forecast unnecessary.” -Benjamin Graham

anon_investor
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Re: Wheres best place park emergency funds these days?

Post by anon_investor » Thu Nov 14, 2019 2:49 pm

Maybe shop around for no penalty CDs, or CDs where the interest penalty isn't that bad. Maybe Ally Bank or Marcus.

NewMoneyMustBeSmart
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Re: Wheres best place park emergency funds these days?

Post by NewMoneyMustBeSmart » Thu Nov 14, 2019 3:57 pm

CodeMaster wrote:
Thu Nov 14, 2019 2:29 pm
Was wondering wheres best place park emergency funds these days with best interest rate / any deals?

Truly appreciate any tips! :sharebeer :beer
www.maxmyinterest.com isn't terrible and sorta of swell. Last time i looked brio.com had the best rate, other posters suggest places to find current highest.

alluringreality
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Re: Wheres best place park emergency funds these days?

Post by alluringreality » Thu Nov 14, 2019 4:55 pm

CodeMaster wrote:
Thu Nov 14, 2019 2:29 pm
www.maxmyinterest.com isn't terrible and sorta of swell.
My girlfriend sent me this link from some article she read asking if it was a good idea for her. The $48 minimum fee per year would have been a horrible idea for her. Someone either has to have far higher monthly expenses than we do or carry larger balances than typically recommended for an emergency fund in order for this to make sense. Personally I carry more cash than usually recommended, so it seemed okay to me, but in an emergency fund thread the fees may be relevant.

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UpsetRaptor
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Re: Wheres best place park emergency funds these days?

Post by UpsetRaptor » Thu Nov 14, 2019 4:56 pm

VTSAX :D

Topic Author
CodeMaster
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Re: Wheres best place park emergency funds these days?

Post by CodeMaster » Fri Nov 15, 2019 12:22 pm

These are really great suggestions! Thank you so much, cant believe theres a bank called Redneck bank ! LOL
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CodeMaster
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Re: Wheres best place park emergency funds these days?

Post by CodeMaster » Fri Nov 15, 2019 1:12 pm

UpsetRaptor wrote:
Thu Nov 14, 2019 4:56 pm
VTSAX :D
I understand this waves up and down less the others but I would opt not to recommend this cause its harder to access those funds if you have to sell it and right now we might be in a bull but if it drops in half and you needed funds, it would really defeat purpose of emergency funds.. and there have been periods and probably will be more periods where stocks dropped nearly in half but came back strong via holding. IF you needed your funds during the time you needed to hold, it would result in total loss. :beer
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Chrono Triggered
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Re: Wheres best place park emergency funds these days?

Post by Chrono Triggered » Fri Nov 15, 2019 5:24 pm

CodeMaster wrote:
Fri Nov 15, 2019 1:12 pm
UpsetRaptor wrote:
Thu Nov 14, 2019 4:56 pm
VTSAX :D
I understand this waves up and down less the others but I would opt not to recommend this cause its harder to access those funds if you have to sell it and right now we might be in a bull but if it drops in half and you needed funds, it would really defeat purpose of emergency funds.. and there have been periods and probably will be more periods where stocks dropped nearly in half but came back strong via holding. IF you needed your funds during the time you needed to hold, it would result in total loss. :beer
Could also keep your "emergency" funds in your bond allocation in your tax-deferred account, with equities in taxable. You then tap equities if you need to, and buy the same amount of equities you sold in your taxable account, in your tax-deferred account. That way you maintain your allocation and keep tax-friendly investments in taxable.

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CodeMaster
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Re: Wheres best place park emergency funds these days?

Post by CodeMaster » Fri Nov 15, 2019 6:04 pm

Chrono Triggered wrote:
Fri Nov 15, 2019 5:24 pm
CodeMaster wrote:
Fri Nov 15, 2019 1:12 pm
UpsetRaptor wrote:
Thu Nov 14, 2019 4:56 pm
VTSAX :D
I understand this waves up and down less the others but I would opt not to recommend this cause its harder to access those funds if you have to sell it and right now we might be in a bull but if it drops in half and you needed funds, it would really defeat purpose of emergency funds.. and there have been periods and probably will be more periods where stocks dropped nearly in half but came back strong via holding. IF you needed your funds during the time you needed to hold, it would result in total loss. :beer
Could also keep your "emergency" funds in your bond allocation in your tax-deferred account, with equities in taxable. You then tap equities if you need to, and buy the same amount of equities you sold in your taxable account, in your tax-deferred account. That way you maintain your allocation and keep tax-friendly investments in taxable.
What would the benefit of doing it this way be? Higher yield?
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Chrono Triggered
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Re: Wheres best place park emergency funds these days?

Post by Chrono Triggered » Fri Nov 15, 2019 6:17 pm

CodeMaster wrote:
Fri Nov 15, 2019 6:04 pm
Chrono Triggered wrote:
Fri Nov 15, 2019 5:24 pm
CodeMaster wrote:
Fri Nov 15, 2019 1:12 pm
UpsetRaptor wrote:
Thu Nov 14, 2019 4:56 pm
VTSAX :D
I understand this waves up and down less the others but I would opt not to recommend this cause its harder to access those funds if you have to sell it and right now we might be in a bull but if it drops in half and you needed funds, it would really defeat purpose of emergency funds.. and there have been periods and probably will be more periods where stocks dropped nearly in half but came back strong via holding. IF you needed your funds during the time you needed to hold, it would result in total loss. :beer
Could also keep your "emergency" funds in your bond allocation in your tax-deferred account, with equities in taxable. You then tap equities if you need to, and buy the same amount of equities you sold in your taxable account, in your tax-deferred account. That way you maintain your allocation and keep tax-friendly investments in taxable.
What would the benefit of doing it this way be? Higher yield?
Better tax efficiency. If you can max out your tax-deferred space and have enough in taxable for your emergency fund first, of course.

Read more: https://www.bogleheads.org/wiki/Placing ... ed_account

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jhfenton
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Re: Wheres best place park emergency funds these days?

Post by jhfenton » Fri Nov 15, 2019 7:42 pm

I view our emergency funds in a hierarchy:

1. credit union checking
2a. credit union savings (a required account, it pays 3% on $500, so we keep $500 in it)
2b. high yield savings
3. VOHIX/Vanguard Ohio Long-Term Tax-Exempt in brokerage
4a. reimbursable amounts held in HSA
4b. taxable equity investments
5. Series I bonds
6. 20 years of Roth IRA contributions

Somewhere in there, I'd throw credit cards too.

If we had a larger taxable account, I would have some CD's too, probably in the 4th tier.

averagedude
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Re: Wheres best place park emergency funds these days?

Post by averagedude » Fri Nov 15, 2019 8:11 pm

If I had it to do all over again, I would had parked my emergency savings in the Vanguard short term corporate bond fund (VSCSX). Here are my reasons why.
1. It is a reasonable option, contrary to what most people believe.
2. We had stable jobs so we never really needed to tap my entire emergency fund. Only a small portion from time to time.
3. Duration is under 3 years.
4. It barely underperformed the total bond index fund, but had better risk adjusted returns. When I say better risk adjusted returns, I mean higher Sharpe ratios.
5. Since inception (2010), the worst year was a gain of 0.88%.
6. The worst max drawdown since inception was -1.58% and it only lasted 5 months.
7. Over the last 10 years, this fund compounded at a rate of return of 2.89%, compared with 0.58% for the Vanguard prime money market. If you had your money in the mega monster banks over the last 10 years like alot of people did, you would had been lucky to have had a return of 0.15%.

alluringreality
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Re: Wheres best place park emergency funds these days?

Post by alluringreality » Sat Nov 16, 2019 9:37 am

averagedude wrote:
Fri Nov 15, 2019 8:11 pm
If I had it to do all over again, I would had parked my emergency savings in the Vanguard short term corporate bond fund (VSCSX).
Similarly I should have put 99% of my extra money into the Nasdaq over the last 10 years, but that didn't seem prudent from the prior 10 years. This is an interesting take, yet as-is it's probably not for me. I was caught off-guard by the 2019 bond increase, 7.3% for this fund through October, so I figure corporates could potentially fall at least that much or more. While I do have a portion of stock in the Nasdaq, it's not the ultimate investment plan for me, although there's still the opportunity to carry out this plan.
2. We had stable jobs so we never really needed to tap my entire emergency fund. Only a small portion from time to time.
I overestimated my own economic value leading up to 2008 and ended up finding out how much the businesses I've worked in after college are tied to the greater economy. I'm sure that's part of why time underwater has been a focus in my considerations for moving from FDIC insured investments to bonds. Basically I try estimating an economic crisis period for something I'd call an emergency fund.
4. It barely underperformed the total bond index fund, but had better risk adjusted returns. When I say better risk adjusted returns, I mean higher Sharpe ratios.
The ratios someone ends up with depends on the holding period. Portfolio Visualizer suggests this fund probably has more risk than total bond or treasuries with a period like 2008 included.
5. Since inception (2010), the worst year was a gain of 0.88%.
Portfolio Visualizer puts the category at -4.7% for 2008. I don't see much information about the makeup of the category, so it's difficult to say exactly how well it directly compares to this fund.
6. The worst max drawdown since inception was -1.58% and it only lasted 5 months.
Portfolio Visualizer shows a 10 month drawdown and recovery in 2017-2018 for VSCSX. The category also shows -7.6% for 2008 with a combined drawdown and recovery time of 15 months.
7. Over the last 10 years, this fund compounded at a rate of return of 2.89%, compared with 0.58% for the Vanguard prime money market.
It seemed like this might be the #1 reason.

Topic Author
CodeMaster
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Re: Wheres best place park emergency funds these days?

Post by CodeMaster » Sat Nov 16, 2019 12:16 pm

Chrono Triggered wrote:
Fri Nov 15, 2019 6:17 pm
CodeMaster wrote:
Fri Nov 15, 2019 6:04 pm
Chrono Triggered wrote:
Fri Nov 15, 2019 5:24 pm
CodeMaster wrote:
Fri Nov 15, 2019 1:12 pm
UpsetRaptor wrote:
Thu Nov 14, 2019 4:56 pm
VTSAX :D
I understand this waves up and down less the others but I would opt not to recommend this cause its harder to access those funds if you have to sell it and right now we might be in a bull but if it drops in half and you needed funds, it would really defeat purpose of emergency funds.. and there have been periods and probably will be more periods where stocks dropped nearly in half but came back strong via holding. IF you needed your funds during the time you needed to hold, it would result in total loss. :beer
Could also keep your "emergency" funds in your bond allocation in your tax-deferred account, with equities in taxable. You then tap equities if you need to, and buy the same amount of equities you sold in your taxable account, in your tax-deferred account. That way you maintain your allocation and keep tax-friendly investments in taxable.
What would the benefit of doing it this way be? Higher yield?
Better tax efficiency. If you can max out your tax-deferred space and have enough in taxable for your emergency fund first, of course.

Read more: https://www.bogleheads.org/wiki/Placing ... ed_account
This is fascinating, I still dont quite understand the concept but its intriguing to me. Its kinda like earning interest but tax deferred, so its like paying tax on those interest when pull out money after retirement?
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Topic Author
CodeMaster
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Re: Wheres best place park emergency funds these days?

Post by CodeMaster » Sat Nov 16, 2019 12:18 pm

jhfenton wrote:
Fri Nov 15, 2019 7:42 pm
I view our emergency funds in a hierarchy:

1. credit union checking
2a. credit union savings (a required account, it pays 3% on $500, so we keep $500 in it)
2b. high yield savings
3. VOHIX/Vanguard Ohio Long-Term Tax-Exempt in brokerage
4a. reimbursable amounts held in HSA
4b. taxable equity investments
5. Series I bonds
6. 20 years of Roth IRA contributions

Somewhere in there, I'd throw credit cards too.

If we had a larger taxable account, I would have some CD's too, probably in the 4th tier.
this is fascinating order of hierarchy... its funny you call all your investments "emergency funds", afterall it really is isnt it! ha

wow this is hardcore... may I ask what credit union your using? If you have a link would appreciate it!

#3 is cool! great returns...
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Topic Author
CodeMaster
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Re: Wheres best place park emergency funds these days?

Post by CodeMaster » Sat Nov 16, 2019 12:22 pm

averagedude wrote:
Fri Nov 15, 2019 8:11 pm
If I had it to do all over again, I would had parked my emergency savings in the Vanguard short term corporate bond fund (VSCSX). Here are my reasons why.
1. It is a reasonable option, contrary to what most people believe.
2. We had stable jobs so we never really needed to tap my entire emergency fund. Only a small portion from time to time.
3. Duration is under 3 years.
4. It barely underperformed the total bond index fund, but had better risk adjusted returns. When I say better risk adjusted returns, I mean higher Sharpe ratios.
5. Since inception (2010), the worst year was a gain of 0.88%.
6. The worst max drawdown since inception was -1.58% and it only lasted 5 months.
7. Over the last 10 years, this fund compounded at a rate of return of 2.89%, compared with 0.58% for the Vanguard prime money market. If you had your money in the mega monster banks over the last 10 years like alot of people did, you would had been lucky to have had a return of 0.15%.
cool fund and facts, i checked it all out.. wanted to call vanguard to ask ques but there closed today being a sat lol

do you ahve to pay taxes on this fund each year on the interest? or how does the tax factor play in overall?
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snowman
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Re: Wheres best place park emergency funds these days?

Post by snowman » Sat Nov 16, 2019 12:28 pm

HY checking acct - 3% up to $15K; you can double it to $30K if each spouse has one.
VMMXX
Years of Roth contributions
18 month 0% interest CC

lotusflower
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Re: Wheres best place park emergency funds these days?

Post by lotusflower » Sun Nov 17, 2019 1:16 am

I keep a good portion of my fund in 12 CapitalOne360 CDs, laddered by one per month. This earns 2.1% and I keep enough in there for mortgage and property tax, so I have 12 months of housing payments ready. That would take a lot of the pressure off of most emergencies.

Then I keep some more in CO360 money market, since some kinds of emergencies might be more of a lump-sum problem. Their new "performance savings" account pays 1.8%.

retiredflyboy
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Re: Wheres best place park emergency funds these days?

Post by retiredflyboy » Sun Nov 17, 2019 1:20 am

Ally Bank
Facts are stubborn things. Everything works until it doesn’t.

EarningBack
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Re: Wheres best place park emergency funds these days?

Post by EarningBack » Sun Nov 17, 2019 2:28 am

snowman wrote:
Sat Nov 16, 2019 12:28 pm
HY checking acct - 3% up to $15K; you can double it to $30K if each spouse has one.
VMMXX
Years of Roth contributions
18 month 0% interest CC
Which bank/financial institution are you using for the checking account?

alluringreality
Posts: 40
Joined: Tue Nov 12, 2019 10:59 am

Re: Wheres best place park emergency funds these days?

Post by alluringreality » Sun Nov 17, 2019 8:34 am

CodeMaster wrote:
Sat Nov 16, 2019 12:22 pm
do you ahve to pay taxes on this fund each year on the interest? or how does the tax factor play in overall?
If you hold it in a taxable account, you will need to pay taxes each year. I would hold that fund there for various reasons that may or may not apply to you, but the Wiki also mentions using a Roth account for emergency funds. Using short-term corporates as an emergency fund is not recommended by the Wiki. There are lots of ways to lose money with bonds for a over a year in an economic downturn, so VSCSX is nothing special to me as an emergency fund. I won't be investing my funds this way, but I'd at least diversify into anything that might perform differently in an economic downturn (VFIIX, local bank/CU options, etc.).

https://www.bogleheads.org/wiki/Emergency_fund
Last edited by alluringreality on Mon Nov 18, 2019 10:31 am, edited 5 times in total.

snowman
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Re: Wheres best place park emergency funds these days?

Post by snowman » Sun Nov 17, 2019 9:46 am

EarningBack wrote:
Sun Nov 17, 2019 2:28 am
snowman wrote:
Sat Nov 16, 2019 12:28 pm
HY checking acct - 3% up to $15K; you can double it to $30K if each spouse has one.
VMMXX
Years of Roth contributions
18 month 0% interest CC
Which bank/financial institution are you using for the checking account?
https://www.lmcu.org/personal/banking/c ... -checking/

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jhfenton
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Location: Ohio

Re: Wheres best place park emergency funds these days?

Post by jhfenton » Sun Nov 17, 2019 10:19 am

CodeMaster wrote:
Sat Nov 16, 2019 12:18 pm
jhfenton wrote:
Fri Nov 15, 2019 7:42 pm
I view our emergency funds in a hierarchy:

1. credit union checking
2a. credit union savings (a required account, it pays 3% on $500, so we keep $500 in it)
2b. high yield savings
3. VOHIX/Vanguard Ohio Long-Term Tax-Exempt in brokerage
4a. reimbursable amounts held in HSA
4b. taxable equity investments
5. Series I bonds
6. 20 years of Roth IRA contributions

Somewhere in there, I'd throw credit cards too.

If we had a larger taxable account, I would have some CD's too, probably in the 4th tier.
this is fascinating order of hierarchy... its funny you call all your investments "emergency funds", afterall it really is isnt it! ha

wow this is hardcore... may I ask what credit union your using? If you have a link would appreciate it!

#3 is cool! great returns...
We use Wright-Patt Credit Union. Last time I saw the numbers it was the largest credit union in Ohio. It got its start at Wright-Patterson Air Force Base in Dayton, Ohio. Our local branch was originally the local General Motors Employee Credit Union, but it merged into WPCU in the 80’s.

It’s a very good credit union as far as service goes—local branch with friendly faces, modern app with mobile deposit, responsive phone support, etc.—but their deposit rates are seldom competitive nationally. We don’t keep any money there beyond our checking and $500 in savings. Beyond the $500, the interest rate is minuscule. We use the same checking account that my wife opened when she was in high school in the mid-80’s.

dru808
Posts: 184
Joined: Sat Oct 15, 2011 2:42 pm

Re: Wheres best place park emergency funds these days?

Post by dru808 » Sun Nov 17, 2019 12:54 pm

jhfenton wrote:
Fri Nov 15, 2019 7:42 pm
I view our emergency funds in a hierarchy:

1. credit union checking
2a. credit union savings (a required account, it pays 3% on $500, so we keep $500 in it)
2b. high yield savings
3. VOHIX/Vanguard Ohio Long-Term Tax-Exempt in brokerage
4a. reimbursable amounts held in HSA
4b. taxable equity investments
5. Series I bonds
6. 20 years of Roth IRA contributions

Somewhere in there, I'd throw credit cards too.

If we had a larger taxable account, I would have some CD's too, probably in the 4th tier.

Edit: on the Roth contribution.

Question, say you contribute 5k, it drops to 3k, it grows to 7k Can you still pull the 5k you initially contributed, in actuality you’d have only 3k in contributions? I’ve asked in multiple places and haven’t received a conclusive answer.

kevinf
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Re: Wheres best place park emergency funds these days?

Post by kevinf » Sun Nov 17, 2019 4:39 pm

On Vanguard, check your cost basis page. It will show you contribution (total cost) vs gains/losses (market value). You should be able to draw out as much as is marked as total cost without penalties. I don't use my roth this way however, so maybe someone else can add on to the discussion.

Topic Author
CodeMaster
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Joined: Sun Mar 18, 2007 3:03 pm

Re: Wheres best place park emergency funds these days?

Post by CodeMaster » Tue Nov 19, 2019 5:47 pm

snowman wrote:
Sat Nov 16, 2019 12:28 pm
HY checking acct - 3% up to $15K; you can double it to $30K if each spouse has one.
VMMXX
Years of Roth contributions
18 month 0% interest CC
what do you do with the 0% interest CC? do you mean its used for emergency?
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Topic Author
CodeMaster
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Re: Wheres best place park emergency funds these days?

Post by CodeMaster » Tue Nov 19, 2019 5:58 pm

snowman wrote:
Sun Nov 17, 2019 9:46 am
EarningBack wrote:
Sun Nov 17, 2019 2:28 am
snowman wrote:
Sat Nov 16, 2019 12:28 pm
HY checking acct - 3% up to $15K; you can double it to $30K if each spouse has one.
VMMXX
Years of Roth contributions
18 month 0% interest CC
Which bank/financial institution are you using for the checking account?
https://www.lmcu.org/personal/banking/c ... -checking/
WOW this is the best bank for highest APY. why doesnt any of the high apy bank searches show this bank in there list? like https://www.doctorofcredit.com/ ? lol

This is GEM!!!! Thank you for this info. I called them, they said as long as you actively use the bank you can get the 3%. So it cant just sit there apparnetly and you have to setup direct deposits and few other things that basically show your active with them.
Youtube Channel: | https://youtube.com/c/CodeBoss911 | Finances / Entrepreneurship / Software Engineering

patrick
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Location: Mega-City One

Re: Wheres best place park emergency funds these days?

Post by patrick » Tue Nov 19, 2019 7:24 pm

CodeMaster wrote:
Tue Nov 19, 2019 5:58 pm
snowman wrote:
Sun Nov 17, 2019 9:46 am
EarningBack wrote:
Sun Nov 17, 2019 2:28 am
snowman wrote:
Sat Nov 16, 2019 12:28 pm
HY checking acct - 3% up to $15K; you can double it to $30K if each spouse has one.
VMMXX
Years of Roth contributions
18 month 0% interest CC
Which bank/financial institution are you using for the checking account?
https://www.lmcu.org/personal/banking/c ... -checking/
WOW this is the best bank for highest APY. why doesnt any of the high apy bank searches show this bank in there list? like https://www.doctorofcredit.com/ ? lol

This is GEM!!!! Thank you for this info. I called them, they said as long as you actively use the bank you can get the 3%. So it cant just sit there apparnetly and you have to setup direct deposits and few other things that basically show your active with them.
The doctorofcredit site linked above does include that account (under https://www.doctorofcredit.com/high-int ... Nationwide) along with even better ones. TAB Bank pays 4% on balances up to $50k and Orion FCU pays 4% on balances up to $30k.

Triple digit golfer
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Re: Wheres best place park emergency funds these days?

Post by Triple digit golfer » Tue Nov 19, 2019 7:40 pm

Chrono Triggered wrote:
Fri Nov 15, 2019 6:17 pm
CodeMaster wrote:
Fri Nov 15, 2019 6:04 pm
Chrono Triggered wrote:
Fri Nov 15, 2019 5:24 pm
CodeMaster wrote:
Fri Nov 15, 2019 1:12 pm
UpsetRaptor wrote:
Thu Nov 14, 2019 4:56 pm
VTSAX :D
I understand this waves up and down less the others but I would opt not to recommend this cause its harder to access those funds if you have to sell it and right now we might be in a bull but if it drops in half and you needed funds, it would really defeat purpose of emergency funds.. and there have been periods and probably will be more periods where stocks dropped nearly in half but came back strong via holding. IF you needed your funds during the time you needed to hold, it would result in total loss. :beer
Could also keep your "emergency" funds in your bond allocation in your tax-deferred account, with equities in taxable. You then tap equities if you need to, and buy the same amount of equities you sold in your taxable account, in your tax-deferred account. That way you maintain your allocation and keep tax-friendly investments in taxable.
What would the benefit of doing it this way be? Higher yield?
Better tax efficiency. If you can max out your tax-deferred space and have enough in taxable for your emergency fund first, of course.

Read more: https://www.bogleheads.org/wiki/Placing ... ed_account
What happens if the market is up, though, and then you need the money? Won't you likely end up worse off by incurring capital gains and having to pay 15% tax on those gains?

dru808
Posts: 184
Joined: Sat Oct 15, 2011 2:42 pm

Re: Wheres best place park emergency funds these days?

Post by dru808 » Tue Nov 19, 2019 8:17 pm

Best is a personal opinion. The best that works for me is ally’s no penalty cd. 11 months at high yield savings rates, locked in for 11 months with no penalty to withdraw money in case of emergency. Works for me :moneybag

Topic Author
CodeMaster
Posts: 700
Joined: Sun Mar 18, 2007 3:03 pm

Re: Wheres best place park emergency funds these days?

Post by CodeMaster » Wed Nov 20, 2019 3:00 am

patrick wrote:
Tue Nov 19, 2019 7:24 pm
CodeMaster wrote:
Tue Nov 19, 2019 5:58 pm
snowman wrote:
Sun Nov 17, 2019 9:46 am
EarningBack wrote:
Sun Nov 17, 2019 2:28 am
snowman wrote:
Sat Nov 16, 2019 12:28 pm
HY checking acct - 3% up to $15K; you can double it to $30K if each spouse has one.
VMMXX
Years of Roth contributions
18 month 0% interest CC
Which bank/financial institution are you using for the checking account?
https://www.lmcu.org/personal/banking/c ... -checking/
WOW this is the best bank for highest APY. why doesnt any of the high apy bank searches show this bank in there list? like https://www.doctorofcredit.com/ ? lol

This is GEM!!!! Thank you for this info. I called them, they said as long as you actively use the bank you can get the 3%. So it cant just sit there apparnetly and you have to setup direct deposits and few other things that basically show your active with them.
The doctorofcredit site linked above does include that account (under https://www.doctorofcredit.com/high-int ... Nationwide) along with even better ones. TAB Bank pays 4% on balances up to $50k and Orion FCU pays 4% on balances up to $30k.
OMGGGG.. HOW DID I MISS THIS, THANK YOU
Youtube Channel: | https://youtube.com/c/CodeBoss911 | Finances / Entrepreneurship / Software Engineering

Chrono Triggered
Posts: 130
Joined: Wed Feb 17, 2016 12:55 pm

Re: Wheres best place park emergency funds these days?

Post by Chrono Triggered » Wed Nov 20, 2019 9:31 am

Triple digit golfer wrote:
Tue Nov 19, 2019 7:40 pm
What happens if the market is up, though, and then you need the money? Won't you likely end up worse off by incurring capital gains and having to pay 15% tax on those gains?
If shares are sold as a gain, there is a good chance only long term capital gains would apply which are taxed more favorably. Even if shares are sold at a short term gain, it would be taxed at the same rate as interest earned in something like a money market fund. So it's a win-win.

Also, in a true emergency such as a job loss, I can think of worse things than selling taxable equities when the market is up. If it's down, one can tax-harvest. Most short-term emergencies can be handled by credit cards, however.

snowman
Posts: 970
Joined: Thu Jan 31, 2013 12:59 pm

Re: Wheres best place park emergency funds these days?

Post by snowman » Wed Nov 20, 2019 9:32 am

CodeMaster wrote:
Wed Nov 20, 2019 3:00 am
patrick wrote:
Tue Nov 19, 2019 7:24 pm
CodeMaster wrote:
Tue Nov 19, 2019 5:58 pm
snowman wrote:
Sun Nov 17, 2019 9:46 am
EarningBack wrote:
Sun Nov 17, 2019 2:28 am

Which bank/financial institution are you using for the checking account?
https://www.lmcu.org/personal/banking/c ... -checking/
WOW this is the best bank for highest APY. why doesnt any of the high apy bank searches show this bank in there list? like https://www.doctorofcredit.com/ ? lol

This is GEM!!!! Thank you for this info. I called them, they said as long as you actively use the bank you can get the 3%. So it cant just sit there apparnetly and you have to setup direct deposits and few other things that basically show your active with them.
The doctorofcredit site linked above does include that account (under https://www.doctorofcredit.com/high-int ... Nationwide) along with even better ones. TAB Bank pays 4% on balances up to $50k and Orion FCU pays 4% on balances up to $30k.
OMGGGG.. HOW DID I MISS THIS, THANK YOU
patrick is correct - there are even better ones out there, but I have no personal experience with them. Few factors made me go with LMCU: 1. I had my HSA there, so it was easy to open max checking account to give it a try; 2. it's extremely easy to satisfy the requirements and check that they've been met; and 3. I don't keep much cash around, so it's not a big deal. All I wanted was to earn guaranteed 3% when I do have some cash.

I suggest you read doc's bank reviews carefully, as well as peoples' comments, before you decide on one of these accounts, because if you don't meet various conditions, you earn nothing. That's the beauty of LMCU - ACH counts as direct deposit, and 10 amazon reloads count as activity. When you sign up for paperless statements, that satisfies 3rd condition automatically every month. And you have to login to your account at least 4 times per month. It takes me about 2 minutes/month to satisfy their conditions, and there is even big orange button that when you click on it, it tells you the current status of all conditions. It cannot be any easier than that, and that's why I am not looking elsewhere.

ChinchillaWhiplash
Posts: 816
Joined: Sat Jan 20, 2018 5:40 pm
Location: Land of Hypoxia

Re: Wheres best place park emergency funds these days?

Post by ChinchillaWhiplash » Wed Nov 20, 2019 10:33 am

I actually hold a lot in some municiple bond funds. Using some higher yield funds with fairly low ERs. In high tax bracket so after tax yield is even higher. Have one fund that holds a lot of bonds from my home state, so get federal and state tax break on that. Basically getting around 6% yield when all is said and done. Some risk involved, but the funds hold a lot of bonds in their portfolios. Worth the risk IMO. Also keep some in online HY savings, but yield has dropped quite a bit recently.

Topic Author
CodeMaster
Posts: 700
Joined: Sun Mar 18, 2007 3:03 pm

Re: Wheres best place park emergency funds these days?

Post by CodeMaster » Wed Nov 20, 2019 11:29 am

Chrono Triggered wrote:
Wed Nov 20, 2019 9:31 am
Triple digit golfer wrote:
Tue Nov 19, 2019 7:40 pm
What happens if the market is up, though, and then you need the money? Won't you likely end up worse off by incurring capital gains and having to pay 15% tax on those gains?
If shares are sold as a gain, there is a good chance only long term capital gains would apply which are taxed more favorably. Even if shares are sold at a short term gain, it would be taxed at the same rate as interest earned in something like a money market fund. So it's a win-win.

Also, in a true emergency such as a job loss, I can think of worse things than selling taxable equities when the market is up. If it's down, one can tax-harvest. Most short-term emergencies can be handled by credit cards, however.
What do you mean by tax harvest?
Youtube Channel: | https://youtube.com/c/CodeBoss911 | Finances / Entrepreneurship / Software Engineering

Topic Author
CodeMaster
Posts: 700
Joined: Sun Mar 18, 2007 3:03 pm

Re: Wheres best place park emergency funds these days?

Post by CodeMaster » Wed Nov 20, 2019 11:31 am

snowman wrote:
Wed Nov 20, 2019 9:32 am
CodeMaster wrote:
Wed Nov 20, 2019 3:00 am
patrick wrote:
Tue Nov 19, 2019 7:24 pm
CodeMaster wrote:
Tue Nov 19, 2019 5:58 pm
WOW this is the best bank for highest APY. why doesnt any of the high apy bank searches show this bank in there list? like https://www.doctorofcredit.com/ ? lol

This is GEM!!!! Thank you for this info. I called them, they said as long as you actively use the bank you can get the 3%. So it cant just sit there apparnetly and you have to setup direct deposits and few other things that basically show your active with them.
The doctorofcredit site linked above does include that account (under https://www.doctorofcredit.com/high-int ... Nationwide) along with even better ones. TAB Bank pays 4% on balances up to $50k and Orion FCU pays 4% on balances up to $30k.
OMGGGG.. HOW DID I MISS THIS, THANK YOU
patrick is correct - there are even better ones out there, but I have no personal experience with them. Few factors made me go with LMCU: 1. I had my HSA there, so it was easy to open max checking account to give it a try; 2. it's extremely easy to satisfy the requirements and check that they've been met; and 3. I don't keep much cash around, so it's not a big deal. All I wanted was to earn guaranteed 3% when I do have some cash.

I suggest you read doc's bank reviews carefully, as well as peoples' comments, before you decide on one of these accounts, because if you don't meet various conditions, you earn nothing. That's the beauty of LMCU - ACH counts as direct deposit, and 10 amazon reloads count as activity. When you sign up for paperless statements, that satisfies 3rd condition automatically every month. And you have to login to your account at least 4 times per month. It takes me about 2 minutes/month to satisfy their conditions, and there is even big orange button that when you click on it, it tells you the current status of all conditions. It cannot be any easier than that, and that's why I am not looking elsewhere.
What does amazon reload mean? Are you able to get any discounts doing it via reload from amazon? :beer
Youtube Channel: | https://youtube.com/c/CodeBoss911 | Finances / Entrepreneurship / Software Engineering

Chrono Triggered
Posts: 130
Joined: Wed Feb 17, 2016 12:55 pm

Re: Wheres best place park emergency funds these days?

Post by Chrono Triggered » Wed Nov 20, 2019 12:20 pm

CodeMaster wrote:
Wed Nov 20, 2019 11:29 am
Chrono Triggered wrote:
Wed Nov 20, 2019 9:31 am
Triple digit golfer wrote:
Tue Nov 19, 2019 7:40 pm
What happens if the market is up, though, and then you need the money? Won't you likely end up worse off by incurring capital gains and having to pay 15% tax on those gains?
If shares are sold as a gain, there is a good chance only long term capital gains would apply which are taxed more favorably. Even if shares are sold at a short term gain, it would be taxed at the same rate as interest earned in something like a money market fund. So it's a win-win.

Also, in a true emergency such as a job loss, I can think of worse things than selling taxable equities when the market is up. If it's down, one can tax-harvest. Most short-term emergencies can be handled by credit cards, however.
What do you mean by tax harvest?
I'd spend some time reading this: https://www.bogleheads.org/wiki/Tax_loss_harvesting

orhkaf
Posts: 38
Joined: Tue Feb 13, 2018 12:39 am

Re: Wheres best place park emergency funds these days?

Post by orhkaf » Wed Nov 20, 2019 12:30 pm

In an effort to not have so many different accounts and to not keep chasing yield, I just keep my emergency fund in VUSXX.

Triple digit golfer
Posts: 3479
Joined: Mon May 18, 2009 5:57 pm

Re: Wheres best place park emergency funds these days?

Post by Triple digit golfer » Wed Nov 20, 2019 3:01 pm

Chrono Triggered wrote:
Wed Nov 20, 2019 9:31 am
Triple digit golfer wrote:
Tue Nov 19, 2019 7:40 pm
What happens if the market is up, though, and then you need the money? Won't you likely end up worse off by incurring capital gains and having to pay 15% tax on those gains?
If shares are sold as a gain, there is a good chance only long term capital gains would apply which are taxed more favorably. Even if shares are sold at a short term gain, it would be taxed at the same rate as interest earned in something like a money market fund. So it's a win-win.

Also, in a true emergency such as a job loss, I can think of worse things than selling taxable equities when the market is up. If it's down, one can tax-harvest. Most short-term emergencies can be handled by credit cards, however.
How is it a win-win to put equities in taxable if you need to withdraw at a gain?

Let's say you put in $10,000 and it increases to $12,000 after two years. You then want to withdraw $10,000. You'll pay on gains of $1,667, of which 15% is $250 in tax. That's the amount before any dividend taxes, which would be $60 assuming a 2% dividend yield. Total tax liability $310.

Had you kept the $10k in savings or a bond fund earning 2%, whatever it may be, and equities in a tax-advantaged account, you'd presumably have $10,400 in the account and paid $96 in tax on earnings, assuming a middle ground 24% federal tax rate.

Am I missing something?

ivk5
Posts: 986
Joined: Thu Sep 22, 2016 9:05 am

Re: Wheres best place park emergency funds these days?

Post by ivk5 » Wed Nov 20, 2019 3:44 pm

Depends on how likely you think an emergency is, as well as rest of financial picture.

Ordinary income tax on fixed income / HYSA / etc is excess tax drag every year, relative to qualified dividends on equities.

LTCG can be mitigated in various ways. Replacing cash charitable donations with donations of low basis shares, for one. Also, if you are regularly investing in taxable, there will always be high basis / low gain shares to liquidate if needed. Those may be more relevant to some than others.

Chrono Triggered
Posts: 130
Joined: Wed Feb 17, 2016 12:55 pm

Re: Wheres best place park emergency funds these days?

Post by Chrono Triggered » Wed Nov 20, 2019 6:06 pm

Triple digit golfer wrote:
Wed Nov 20, 2019 3:01 pm
Chrono Triggered wrote:
Wed Nov 20, 2019 9:31 am
Triple digit golfer wrote:
Tue Nov 19, 2019 7:40 pm
What happens if the market is up, though, and then you need the money? Won't you likely end up worse off by incurring capital gains and having to pay 15% tax on those gains?
If shares are sold as a gain, there is a good chance only long term capital gains would apply which are taxed more favorably. Even if shares are sold at a short term gain, it would be taxed at the same rate as interest earned in something like a money market fund. So it's a win-win.

Also, in a true emergency such as a job loss, I can think of worse things than selling taxable equities when the market is up. If it's down, one can tax-harvest. Most short-term emergencies can be handled by credit cards, however.
How is it a win-win to put equities in taxable if you need to withdraw at a gain?

Let's say you put in $10,000 and it increases to $12,000 after two years. You then want to withdraw $10,000. You'll pay on gains of $1,667, of which 15% is $250 in tax. That's the amount before any dividend taxes, which would be $60 assuming a 2% dividend yield. Total tax liability $310.

Had you kept the $10k in savings or a bond fund earning 2%, whatever it may be, and equities in a tax-advantaged account, you'd presumably have $10,400 in the account and paid $96 in tax on earnings, assuming a middle ground 24% federal tax rate.

Am I missing something?
You're paying more taxes in the first example, sure, but in that example, a $2,000 gain is more than the $400 gain in your second example.

The take home message is that paying 15% on something when you choose to sell is better than continuously paying 24% on non-qualified dividends. This concept is one of the reasons why equities are more tax efficient than fixed income: https://www.bogleheads.org/wiki/Tax-eff ... _placement

bck63
Posts: 715
Joined: Fri Sep 28, 2018 4:59 pm

Re: Wheres best place park emergency funds these days?

Post by bck63 » Wed Nov 20, 2019 6:18 pm

80% treasury money market fund, 20% Fallen Angel High Yield Bond fund.

Triple digit golfer
Posts: 3479
Joined: Mon May 18, 2009 5:57 pm

Re: Wheres best place park emergency funds these days?

Post by Triple digit golfer » Wed Nov 20, 2019 6:47 pm

Chrono Triggered wrote:
Wed Nov 20, 2019 6:06 pm
Triple digit golfer wrote:
Wed Nov 20, 2019 3:01 pm
Chrono Triggered wrote:
Wed Nov 20, 2019 9:31 am
Triple digit golfer wrote:
Tue Nov 19, 2019 7:40 pm
What happens if the market is up, though, and then you need the money? Won't you likely end up worse off by incurring capital gains and having to pay 15% tax on those gains?
If shares are sold as a gain, there is a good chance only long term capital gains would apply which are taxed more favorably. Even if shares are sold at a short term gain, it would be taxed at the same rate as interest earned in something like a money market fund. So it's a win-win.

Also, in a true emergency such as a job loss, I can think of worse things than selling taxable equities when the market is up. If it's down, one can tax-harvest. Most short-term emergencies can be handled by credit cards, however.
How is it a win-win to put equities in taxable if you need to withdraw at a gain?

Let's say you put in $10,000 and it increases to $12,000 after two years. You then want to withdraw $10,000. You'll pay on gains of $1,667, of which 15% is $250 in tax. That's the amount before any dividend taxes, which would be $60 assuming a 2% dividend yield. Total tax liability $310.

Had you kept the $10k in savings or a bond fund earning 2%, whatever it may be, and equities in a tax-advantaged account, you'd presumably have $10,400 in the account and paid $96 in tax on earnings, assuming a middle ground 24% federal tax rate.

Am I missing something?
You're paying more taxes in the first example, sure, but in that example, a $2,000 gain is more than the $400 gain in your second example.
But the assumption is that you would hold equities in tax deferred, so the $2,000 gain would be in there.

Chrono Triggered
Posts: 130
Joined: Wed Feb 17, 2016 12:55 pm

Re: Wheres best place park emergency funds these days?

Post by Chrono Triggered » Wed Nov 20, 2019 6:51 pm

Triple digit golfer wrote:
Wed Nov 20, 2019 6:47 pm
Chrono Triggered wrote:
Wed Nov 20, 2019 6:06 pm
Triple digit golfer wrote:
Wed Nov 20, 2019 3:01 pm
Chrono Triggered wrote:
Wed Nov 20, 2019 9:31 am
Triple digit golfer wrote:
Tue Nov 19, 2019 7:40 pm
What happens if the market is up, though, and then you need the money? Won't you likely end up worse off by incurring capital gains and having to pay 15% tax on those gains?
If shares are sold as a gain, there is a good chance only long term capital gains would apply which are taxed more favorably. Even if shares are sold at a short term gain, it would be taxed at the same rate as interest earned in something like a money market fund. So it's a win-win.

Also, in a true emergency such as a job loss, I can think of worse things than selling taxable equities when the market is up. If it's down, one can tax-harvest. Most short-term emergencies can be handled by credit cards, however.
How is it a win-win to put equities in taxable if you need to withdraw at a gain?

Let's say you put in $10,000 and it increases to $12,000 after two years. You then want to withdraw $10,000. You'll pay on gains of $1,667, of which 15% is $250 in tax. That's the amount before any dividend taxes, which would be $60 assuming a 2% dividend yield. Total tax liability $310.

Had you kept the $10k in savings or a bond fund earning 2%, whatever it may be, and equities in a tax-advantaged account, you'd presumably have $10,400 in the account and paid $96 in tax on earnings, assuming a middle ground 24% federal tax rate.

Am I missing something?
You're paying more taxes in the first example, sure, but in that example, a $2,000 gain is more than the $400 gain in your second example.
But the assumption is that you would hold equities in tax deferred, so the $2,000 gain would be in there.
Yes, but if the overall gain will be the same in both scenarios, wouldn't it be better for you to house more tax-efficient investments in your taxable account opposed to less tax-efficient investments?

Triple digit golfer
Posts: 3479
Joined: Mon May 18, 2009 5:57 pm

Re: Wheres best place park emergency funds these days?

Post by Triple digit golfer » Wed Nov 20, 2019 7:03 pm

Chrono Triggered wrote:
Wed Nov 20, 2019 6:51 pm
Triple digit golfer wrote:
Wed Nov 20, 2019 6:47 pm
Chrono Triggered wrote:
Wed Nov 20, 2019 6:06 pm
Triple digit golfer wrote:
Wed Nov 20, 2019 3:01 pm
Chrono Triggered wrote:
Wed Nov 20, 2019 9:31 am

If shares are sold as a gain, there is a good chance only long term capital gains would apply which are taxed more favorably. Even if shares are sold at a short term gain, it would be taxed at the same rate as interest earned in something like a money market fund. So it's a win-win.

Also, in a true emergency such as a job loss, I can think of worse things than selling taxable equities when the market is up. If it's down, one can tax-harvest. Most short-term emergencies can be handled by credit cards, however.
How is it a win-win to put equities in taxable if you need to withdraw at a gain?

Let's say you put in $10,000 and it increases to $12,000 after two years. You then want to withdraw $10,000. You'll pay on gains of $1,667, of which 15% is $250 in tax. That's the amount before any dividend taxes, which would be $60 assuming a 2% dividend yield. Total tax liability $310.

Had you kept the $10k in savings or a bond fund earning 2%, whatever it may be, and equities in a tax-advantaged account, you'd presumably have $10,400 in the account and paid $96 in tax on earnings, assuming a middle ground 24% federal tax rate.

Am I missing something?
You're paying more taxes in the first example, sure, but in that example, a $2,000 gain is more than the $400 gain in your second example.
But the assumption is that you would hold equities in tax deferred, so the $2,000 gain would be in there.
Yes, but if the overall gain will be the same in both scenarios, wouldn't it be better for you to house more tax-efficient investments in your taxable account opposed to less tax-efficient investments?
If you won't be selling, sure.

User avatar
Johnnie
Posts: 554
Joined: Sat May 28, 2016 3:18 pm
Location: Michigan

Re: Wheres best place park emergency funds these days?

Post by Johnnie » Wed Nov 20, 2019 7:35 pm

Someone once said here, "My portfolio IS my emergency fund."

Maybe not for younger people, but as a pre-retiree that rang true for me.
(Pay no attention to that excessive balance in a local checking account. :oops: )
"I know nothing."

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