Where do you keep your emergency fund?

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red_uu
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Where do you keep your emergency fund?

Postby red_uu » Wed Jan 11, 2017 10:33 am

Mine has been languishing in a savings account for too long.

Any good rates out there that I should take advantage of?

Thanks!

ZeroWealth
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Re: Where do you keep your emergency fund?

Postby ZeroWealth » Wed Jan 11, 2017 11:02 am

We just moved ours over to a Vanguard brokerage account invested in VSCGX (LifeStrategy Conservative Growth) with a 20% buffer above our 6-month expenses to account for any dips in the market.

Every year we plan on taking anything over that 20% and moving it over to another taxable account that has a more aggressive makeup.

Edit: I should add, we also have an "Unbudgeted Expenses" savings account where we keep a few grand for immediate emergencies. We look at our primary EF as a safety net to sustain our family should we lose our income stream for a period of time due to unemployment.
Last edited by ZeroWealth on Wed Jan 11, 2017 11:14 am, edited 3 times in total.
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mhc
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Re: Where do you keep your emergency fund?

Postby mhc » Wed Jan 11, 2017 11:03 am

There are lots of threads on this.

If you want a dedicated EF, then an online savings accout can get you about 1%. You could ladder CDs or use a short term bond fund. If you have a large portfolio, a dedicated EF is not necessary.

brad.clarkston
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Re: Where do you keep your emergency fund?

Postby brad.clarkston » Wed Jan 11, 2017 11:10 am

Ally 1% account + a local bank account.

My philosophy is a EF fund is for emergency's not money making especially in this no interest period.
I've actually had to use my EF a few times for real emergencies so I'm more risk averse that someone that hasn't.

NoD
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Re: Where do you keep your emergency fund?

Postby NoD » Wed Jan 11, 2017 11:13 am

Checking account at Lake Michigan CU. 3% up to 15k for very little effort.
Some day we'll look back on all this and plow into a parked car.

red_uu
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Re: Where do you keep your emergency fund?

Postby red_uu » Wed Jan 11, 2017 11:17 am

I am interested in an online savings account, just need something that lets me transfer money to checking account quickly and easily.

Recommendations for online savings accounts?

Thanks!

ZeroWealth
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Re: Where do you keep your emergency fund?

Postby ZeroWealth » Wed Jan 11, 2017 11:21 am

red_uu wrote:I am interested in an online savings account, just need something that lets me transfer money to checking account quickly and easily.

Recommendations for online savings accounts?

Thanks!

For a simple online savings account, you can't go wrong with Ally. 1.00% right now and we have three of them and a checking account. Never any issues, their transfers are quick and they have great customer service.
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JupiterJones
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Re: Where do you keep your emergency fund?

Postby JupiterJones » Wed Jan 11, 2017 11:25 am

IMHO, it's perfectly okay if your EF "languishes".

Sure, there are some better-paying savings accounts with the online banks that might merit a look. And/or you could do some fiddling with CDs for some of it, etc. Nothing wrong with that. (We use an online account for the bulk of our EF that earns something like 0.75% these days. Could be better, but not too bad.)

But in the end, no one is getting rich off the interest of their emergency funds. That's just not what emergency funds are for. Their main job is not to "work for you" and grow, but rather to not lose value and to be appropriately liquid. It that means they languish a bit, well so bit.
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bengal22
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Re: Where do you keep your emergency fund?

Postby bengal22 » Wed Jan 11, 2017 11:26 am

Keep my EF in the taxable portion (mutual funds) of my portfolio. These funds are as accessible as a money market fund. Do not believe in keeping my funds on the sideline.

Ace$
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Re: Where do you keep your emergency fund?

Postby Ace$ » Wed Jan 11, 2017 11:29 am

brad.clarkston wrote:Ally 1% account + a local bank account.

My philosophy is a EF fund is for emergency's not money making especially in this no interest period.
I've actually had to use my EF a few times for real emergencies so I'm more risk averse that someone that hasn't.


I agree. I keep the lion's share of it in an online account; however, I have a few thousand at my local bank so I can have physical access if necessary. EF are savings accounts not investment accounts meaning they serve a much different purpose. Access is the most important thing.

ZeroWealth
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Re: Where do you keep your emergency fund?

Postby ZeroWealth » Wed Jan 11, 2017 11:39 am

JupiterJones wrote:But in the end, no one is getting rich off the interest of their emergency funds. That's just not what emergency funds are for. Their main job is not to "work for you" and grow, but rather to not lose value and to be appropriately liquid. It that means they languish a bit, well so bit.

I think the one thing that struck me recently was that I hadn't accounted for inflation. Inflation is currently at ~1.7%, but it's been much higher in the past. Even at a good 1.00% interest rate from an online bank, you're still "losing" money every year in the sense that the purchasing power of your EF drops due to inflation.

Even if you went with the most conservative of investments where a potential drop could result in 5-10% loss, you're still keeping up with and slightly ahead of inflation, so when that emergency does show up (maybe even 10-15 years down the road), you still have X months of expenses saved up in tomorrow's dollars.
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jeff1949
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Re: Where do you keep your emergency fund?

Postby jeff1949 » Wed Jan 11, 2017 11:58 am

Primary: Ally Savings and no penalty CDs.

Secondary: I-Bonds

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TinkerPDX
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Re: Where do you keep your emergency fund?

Postby TinkerPDX » Wed Jan 11, 2017 12:09 pm

Our EF consists of i-bonds and EE-bonds in Treasury Direct account, plus all of our Roth IRAs and the Roth portion of my 401k.

I am willing to take the risk of needing to draw on some of this while it's down if needed (the equity portion of our Roth retirement accounts) after drawing the safe portion (TD, bond portion of retirement accounts).

Since we're not quite maxing all tax advantaged space, I feel the cost/benefit of putting the money there is better than leaving a substantial portion of our investable assets (which a 6-month EF would constitute) on the sidelines.

We also have a HELOC which we can tap if needed for short-term cash flow issues, and two investment properties we could sell in a true "emergency."

Eventually, when the portfolio is big enough that the TIP portion of our AA is enough to be an EF, I imagine most of our EF will be i-bonds in the Treasury Direct account + a little in the 1% ally savings account.

guitarguy
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Re: Where do you keep your emergency fund?

Postby guitarguy » Wed Jan 11, 2017 12:33 pm

2 months expenses in Ally savings. 4 more months expenses are allocated in one of our Roth IRAs at Vanguard, in VBIRX.

We also have plenty more cash on hand at Ally that is earmarked for other stuff, that we could tap if needed.

We separate into "buckets" but if something really catastrophic were to happen, we would be able to use any or all of it.

red_uu
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Re: Where do you keep your emergency fund?

Postby red_uu » Wed Jan 11, 2017 12:42 pm

Thanks so much for all these suggestions!

I have my money sitting in a savings account making like .25, so even 1% is an improvement. I'll check out Ally.

I am planning to get a HELOC to use as an emergency fund, but was thinking of doing that at the same time that I get my PMI removed (next January) so that I can use the same appraisal. (The interest rate is significantly lower if you are at 80 percent or less.)

Ron Ronnerson
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Re: Where do you keep your emergency fund?

Postby Ron Ronnerson » Wed Jan 11, 2017 12:45 pm

Most of it is in a checking account at Provident Credit Union earning 2.01% on up to $25k for virtually no effort. Requirements are one transfer into the account per month and $300 worth of charges onto the debit card associated with the account. I have it set to automatically charge my auto/home/umbrella insurance bill to the debit card and to automatically transfer $500 into the account from Ally Bank at the beginning of the month and transfer it back to Ally Bank at the end of the month. Everything is on auto so there really isn't much to do.

A smaller part of our emergency fund is at Ally Bank earning 0.85%. We've had that account since 2006 and have been very satisfied with Ally.

Our main checking account that we pay the monthly bills out of are with Bank of America but we're thinking of opening another checking account with Provident with my wife as the primary and me as the secondary so we can earn 2.01% instead of 0% on that as well. It will be a process to move all our bills to the new account and we just haven't gotten around to it.

DGE
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Re: Where do you keep your emergency fund?

Postby DGE » Wed Jan 11, 2017 12:50 pm

I keep mine in a High Yield Savings Account (1.10%) at Flagstar Bank.

The Lake Michigan offer of 3% sounds good, but requires you to make 10 debit card purchases a month and also log on to the account from home at least 4 times per month. Not sure if the extra hassle of "working" for that 3% is worth it, as it would only equate to an ~$270 a year in earned interest.

dsmil
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Re: Where do you keep your emergency fund?

Postby dsmil » Wed Jan 11, 2017 12:54 pm

Ours are split between Ally Bank and our Roths with Vanguard (ST Federal Funds & ST Bond Index Fund).

eog
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Re: Where do you keep your emergency fund?

Postby eog » Wed Jan 11, 2017 1:17 pm

Mine is at Capital One earning a fantastic 0.75%. I go back and forth about just moving it to Fidelity to consolidate all my accounts but cant really find a good fund to put it in.

lazydavid
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Re: Where do you keep your emergency fund?

Postby lazydavid » Wed Jan 11, 2017 1:25 pm

ProShares UltraPro S&P500 Bear 3x ETF!

Just kidding. :mrgreen: Between a third and half are in a CU checking account, most of the rest in my Wealthfront taxable account. Plus a few grand in cash.

batpot
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Re: Where do you keep your emergency fund?

Postby batpot » Wed Jan 11, 2017 1:47 pm

Barclays HYSA, because I can get an ACH transfer in 24 hours.

mister37
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Re: Where do you keep your emergency fund?

Postby mister37 » Wed Jan 11, 2017 1:51 pm

We have ours in a local Credit Union paying 1.5% as long as we have one direct deposit and 10 debit card transactions. We deposit a little money each paycheck and use some of that for our 10 debits.
We also have various accounts at Capital One and Ally, for things like vacation, property taxes, Life insurance, etc. Both have been trouble free moving money. I don't think it have ever taken over two days to show up in our main checking account.
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NoD
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Re: Where do you keep your emergency fund?

Postby NoD » Wed Jan 11, 2017 2:04 pm

DGE wrote:I keep mine in a High Yield Savings Account (1.10%) at Flagstar Bank.

The Lake Michigan offer of 3% sounds good, but requires you to make 10 debit card purchases a month and also log on to the account from home at least 4 times per month. Not sure if the extra hassle of "working" for that 3% is worth it, as it would only equate to an ~$270 a year in earned interest.


This is true. How I get around this is:

A) I use personal capital. It auto logs in every day to update, so this happens even if I never personally log in :happy
b) Amazon lets me replenish my gift card balance .50 at a time. I spread this out over a couple days. Costs 5 bucks, meets 10 purchases.

Easy peasy :)
Some day we'll look back on all this and plow into a parked car.

DGE
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Re: Where do you keep your emergency fund?

Postby DGE » Wed Jan 11, 2017 2:08 pm

NoD wrote:
DGE wrote:I keep mine in a High Yield Savings Account (1.10%) at Flagstar Bank.

The Lake Michigan offer of 3% sounds good, but requires you to make 10 debit card purchases a month and also log on to the account from home at least 4 times per month. Not sure if the extra hassle of "working" for that 3% is worth it, as it would only equate to an ~$270 a year in earned interest.


This is true. How I get around this is:

A) I use personal capital. It auto logs in every day to update, so this happens even if I never personally log in :happy
b) Amazon lets me replenish my gift card balance .50 at a time. I spread this out over a couple days. Costs 5 bucks, meets 10 purchases.

Easy peasy :)


That Amazon idea is brilliant! :sharebeer

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Re: Where do you keep your emergency fund?

Postby aj76er » Wed Jan 11, 2017 2:18 pm

eog wrote:Mine is at Capital One earning a fantastic 0.75%. I go back and forth about just moving it to Fidelity to consolidate all my accounts but cant really find a good fund to put it in.


I think about the same thing, as I'm also consolidating things over to Fidelity.
What about using SHV? or FSITX?
Unfortunately Fidelity's money market funds all seem to have very high ER's, so the yields aren't very good.
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KCinBAMA
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Re: Where do you keep your emergency fund?

Postby KCinBAMA » Wed Jan 11, 2017 2:19 pm

CU Savings: 1 month expenses
CU Checking: $2000 buffer + current expenses
Discover MM .80% - 2 yrs 'big ticket' expenses (vacations/birthday&xmas gifts/one time big purchases, etc) if needed for an emergency, all these expenses can be cut to pay for the emergency
Discover Savings .95% - 15mos living expenses

I use the Discover CC to pay for the 'big ticket' items and can pay it immediately from the Discover MM fund
Transferring between Discover and CU takes 3-5 business days.

jsapiandante
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Re: Where do you keep your emergency fund?

Postby jsapiandante » Wed Jan 11, 2017 2:29 pm

We always have at least 2-4 months worth of expenses in our checking, 2 months in an online savings account yielding 1%, rest is with our taxable account that we make monthly contribution on. I figured that if a true emergency ever came up (needing more than 6 months expenses in one transaction), we can use our credit cards and pay it off at the end of the month while we transfer all the needed funds from our accounts. I highly doubt something like that would ever happen, but it provides peace of mind for us should the need arise. If that emergency never comes, then we are that much closer to financial independence. Our EF has grown now to over 2 years of expenses.

Andyrunner
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Re: Where do you keep your emergency fund?

Postby Andyrunner » Wed Jan 11, 2017 2:33 pm

2 months expenses in checking
6 months expenses in savings
6 months expenses and growing in non-retirement S&P500 mutual fund.

I have it auto set to add $500/month into the mutual fund, my thoughts are if the market crashes and it drops 50% I will still have 11-12 months of expenses to use. My wife and I also have fairly secure jobs.

Grt2bOutdoors
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Re: Where do you keep your emergency fund?

Postby Grt2bOutdoors » Wed Jan 11, 2017 3:34 pm

Cash in wallet
FDIC insured savings account
I bonds
EE bonds
Short Term Tax Exempt fund (was Intermediate but I TLH'd out of it).
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pasadena
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Re: Where do you keep your emergency fund?

Postby pasadena » Wed Jan 11, 2017 3:46 pm

- 1 to 2 months of expenses in my checking account

- 6 months in Ally Savings account / No Penalty CD's - that's my actual EF.
- Nothing in another Ally savings account that I just opened for a future car replacement :)

If push comes to shove, my Roth IRA has another 6 months invested in VBTLX.

And if everything falls apart and I lose my job, my brokerage account also has 6 months of expenses in it, and growing with every paycheck. But it's at the mercy of a market downturn since it's 100% VTSAX.

Atilla
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Re: Where do you keep your emergency fund?

Postby Atilla » Wed Jan 11, 2017 3:46 pm

About 1 year's expenses - 95% of it in online savings accounts and 5% available as a zombie apocalypse GTFO fund in a safe.
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blueberry
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Re: Where do you keep your emergency fund?

Postby blueberry » Wed Jan 11, 2017 3:55 pm

I keep cash at CIT bank. They just raised their rate to 1.05% and also are offering a little cash promotion for opening a new account.

Secondary would be cds at Andrews as many others here have done, which pay 3% though now only for a 7 year term. Not a bad penalty if you break them (tho I think terms like that can change) so seems like an okay emergency fund.

-bb

MathWizard
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Re: Where do you keep your emergency fund?

Postby MathWizard » Wed Jan 11, 2017 4:01 pm

1st tier : 4 months in savings at local bank

2nd tier : 16 months in ROTH contribution at Vanguard (current account value is 40 months expenses)

Local savings is low now because we just did lots of house maintenance and paid off the mortgage
(all within 6 months), and my son is in his last year of a college.
We now are replenishing the 1st tier at the rate of 1/3 month's expenses each month,
as well as maxing retirement accounts.

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Phineas J. Whoopee
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Re: Where do you keep your emergency fund?

Postby Phineas J. Whoopee » Wed Jan 11, 2017 4:52 pm

red_uu wrote:...
I am planning to get a HELOC to use as an emergency fund, but was thinking of doing that at the same time that I get my PMI removed (next January) so that I can use the same appraisal. (The interest rate is significantly lower if you are at 80 percent or less.)

Many people do that, but there's a pitfall to watch out for. If you've already taken it into consideration, then great and think of this post as something to help someone else who comes across this thread later.

The potential problem with relying on a line of credit to cover emergencies is that, depending on the emergency, the line can be reduced, or cancelled entirely, at the same time as the emergency, possibly even for the same cause as the emergency.

If the emergency is major car repair, or medical treatment, or something like that, then fine. It's individual to you. If it's job loss, the lender may not be willing to lend as much. If it's widespread economic dislocation, the lender might not be willing, or able, to lend at all.

I'm not saying don't rely on a HELOC, just that before doing so one should take these factors into account.

PJW

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Phineas J. Whoopee
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Re: Where do you keep your emergency fund?

Postby Phineas J. Whoopee » Wed Jan 11, 2017 5:15 pm

Part of it does double duty to ensure continued financial operations, as recounted in this post. The rest is in I Bonds.

I've come to a point where I hold myself responsible for justifying the location of every dollar of cash that isn't in I Bonds. I only have the opportunity because I started buying them the year I first got turned on to them, in 2010, due to posts here (although I hadn't registered yet).

When I started investing in the early 1990s I investigated savings bonds, decided against using them, then gave them no more attention. That's how I missed the I Bond introduction and the early higher fixed rates. On the other hand, in 1998 I wasn't adding to my portfolio (instead I was trying to grow my business), so maybe it would have made little difference to find out then. A few years later the situation had changed, but savings bonds were still off my radar.

Learning about new possibilities when they come up is one of the benefits I get from bogleheads.org. I try to pay the community back by helping others. Sometimes I succeed.

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Biglaw Investor
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Re: Where do you keep your emergency fund?

Postby Biglaw Investor » Wed Jan 11, 2017 5:34 pm

red_uu wrote:Mine has been languishing in a savings account for too long.

Any good rates out there that I should take advantage of?

Thanks!


Mine is in LifeStrategy Conservative Growth (as another poster mentioned up above). At a certain point once your net worth gets positive and you have access to credit cards, etc., I don't see the point in keeping a cash emergency fund.

Trev H
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Re: Where do you keep your emergency fund?

Postby Trev H » Wed Jan 11, 2017 5:44 pm

I keep part in local brick and mortar bank. (this earns practically no interest).
Part in Capitol One Online Savings Account (this pays .75 currently).
Part in Taxable Account invested in Wellesley Income fund (about 1/3 of total or a little more since it has grown nicely)...

I started the Wellesley investment beginning of 2012... and so far it has done this...

+10.06, +9.19, +8.07, + 1.28, +8.08

Wellesley's 5 year return is 7.29
After tax on distributions 5.72
After tax on distributions and sale of fund shares 5.27

the after tax calculations for done for highest tax brackets... which do not apply to me.

I am absolutely OK with the volatility of Wellesley income fund.

Trev H

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F150HD
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Re: Where do you keep your emergency fund?

Postby F150HD » Wed Jan 11, 2017 8:18 pm

red_uu wrote:I am interested in an online savings account, just need something that lets me transfer money to checking account quickly and easily.

Recommendations for online savings accounts?

Thanks!


+1 on Ally.

Alchemist
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Re: Where do you keep your emergency fund?

Postby Alchemist » Wed Jan 11, 2017 10:15 pm

Biglaw Investor wrote:
Mine is in LifeStrategy Conservative Growth (as another poster mentioned up above). At a certain point once your net worth gets positive and you have access to credit cards, etc., I don't see the point in keeping a cash emergency fund.


I could not disagree more with the bolded statement. The EF is not just to actually pay for unexpected expenses, but to cover for job loss. If you lose your job, how much access to credit will you have? What if at the same time the market is crashing? This means you must sell shares at the worst possible time.

The EF is for paying for the actual unexpected expenses and to protect your investments. I 'pay' to keep cash on hand in a savings account in order to protect my shares in mutual funds as well as to avoid incurring debt.

MrsRoos
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Re: Where do you keep your emergency fund?

Postby MrsRoos » Thu Jan 12, 2017 1:45 am

We use Alliant Credit Union with 1.00% APY. There is a branch in our area in case we need access to cold hard cash quickly. Credit unions are a great alternative to commercial banks.
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patrick
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Re: Where do you keep your emergency fund?

Postby patrick » Thu Jan 12, 2017 2:24 am

Alchemist wrote:
Biglaw Investor wrote:
Mine is in LifeStrategy Conservative Growth (as another poster mentioned up above). At a certain point once your net worth gets positive and you have access to credit cards, etc., I don't see the point in keeping a cash emergency fund.


I could not disagree more with the bolded statement. The EF is not just to actually pay for unexpected expenses, but to cover for job loss. If you lose your job, how much access to credit will you have? What if at the same time the market is crashing? This means you must sell shares at the worst possible time.

The EF is for paying for the actual unexpected expenses and to protect your investments. I 'pay' to keep cash on hand in a savings account in order to protect my shares in mutual funds as well as to avoid incurring debt.


If you obtain the credit cards before job loss, you can still use them after. Maybe you'd run into bad luck and have credit cards cancelled, but losing all the credit cards seems very unlikely if you have a good credit history and cards from multiple issuers (unless you never use any of them and they get shut them down for inactivity).

The problem with trying to avoid selling investments at the worst possible time is that it is rather difficult to tell when the worst possible time is (except in retrospect). Even after a market crash, the market could still go down more.

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Toons
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Re: Where do you keep your emergency fund?

Postby Toons » Thu Jan 12, 2017 7:04 am

Online Savings

:happy
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sambb
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Re: Where do you keep your emergency fund?

Postby sambb » Thu Jan 12, 2017 7:13 am

having an emergency fund was one of the dumbest financial moves i made. i have enough in taxable accts to cover emergencies, with a quick sale of funds. I wish i had invested those emergency dollars a long time ago, instead of letting them languish. I think the recommendation can be dubious.

jh-1391
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Re: Where do you keep your emergency fund?

Postby jh-1391 » Thu Jan 12, 2017 8:08 am

sambb wrote:having an emergency fund was one of the dumbest financial moves i made. i have enough in taxable accts to cover emergencies, with a quick sale of funds. I wish i had invested those emergency dollars a long time ago, instead of letting them languish. I think the recommendation can be dubious.


Funny. I feel the opposite. It is SO nice knowing I can weather most any financial storm and not have to worry about what the market is doing. But I'm young and still a high earner so I've been aggressively saving for retirement in 401k/Roth. I can see if folks had to delay those savings for a significant period of time to fund and keep an EF they may feel differently.

To the OP, I was keeping it in a 1.05% Synchrony HYSA, but I consolidated accounts earlier this year. The majority of it I just keep in a crappy savings account with my main bank, and I have a small portion in a HYSA earning 0.8% interest (I get cash back CC earnings sent there and they get special treatment, etc.) Once my portfolio is larger, I'll probably start buying I bonds again. I had some over a year ago, but I didn't like the 1 year wait to get to my money if something happened. That said, I think I bonds are a GREAT EF vehicle as they protect against inflation and are super safe, and it's why I plan on adding them back in once I've gotten everything else funded that I want this year.

I also have smaller savings accounts where I save for my auto insurance, irregular home service visits, shopping for work clothes/gifts, house stuff, and vacations. It's pretty much eliminated me dipping into my EF for non-emergencies like I was early on in my career. But, building up these cash accounts has meant my taxable investing has suffered. Retirement is good and on track, but I'm eager to start building up my taxable investments now that my cash savings are on "auto pilot".

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steelerfan
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Re: Where do you keep your emergency fund?

Postby steelerfan » Thu Jan 12, 2017 11:42 am

red_uu wrote:I am interested in an online savings account, just need something that lets me transfer money to checking account quickly and easily.

Recommendations for online savings accounts?

Thanks!


I use Radius Bank - 1% and I transfer to and from it regularly with my USAA accounts.
"You make most of your money in a bear market, you just don't realize it at the time." - Shelby Cullom Davis

beardsworth
Posts: 1884
Joined: Fri Jun 15, 2007 4:02 pm

Re: Where do you keep your emergency fund?

Postby beardsworth » Thu Jan 12, 2017 12:33 pm

Here's the post I recently made on another thread which was specifically asking for opinions about the use of Vanguard Short-Term Bond Index as an emergency fund, to which some posters suggested alternatives:

It's obviously a matter of personal choice.

But I wouldn't want to keep emergency money in a vehicle whose value can change constantly, even if not very dramatically, with credit and interest rate markets.

And I wouldn't want an emergency vehicle whose every use, i.e., taking out any amount of money, however small, creates a separate "taxable event" to complicate my tax return at year-end.

Concerning Vanguard Ultra Short, I wouldn't want to keep emergency money in something with almost 30% of its holdings in corporate securities and almost 39% in assorted "asset-backed" holdings

http://portfolios.morningstar.com/fund/summary?t=VUSFX

whose very names, let alone internal workings, I find difficult to understand

http://portfolios.morningstar.com/fund/holdings?t=VUSFX

And, regarding Vanguard Short-Term Bond Index, I wouldn't want emergency money in a fund with a quarter of assets rated below triple-A and double-A.

http://portfolios.morningstar.com/fund/summary?t=VBIRX

But then, I look at an emergency fund as something to be as safe, and cash-like, and free of additional tax headaches, as possible, rather than something to "make money on." Ours is parked in an insured credit union money market account. A number of other people on this forum have mentioned their use of U.S. Savings Bonds.

As I said, it's a personal choice.

LiterallyIronic
Posts: 185
Joined: Sat Dec 05, 2015 10:36 am

Re: Where do you keep your emergency fund?

Postby LiterallyIronic » Thu Jan 12, 2017 12:55 pm

Wells Fargo checking account earning 0.01%. Emergency Fund is $6,000 and it's for accessibility not yield-chasing.

boglephreak
Posts: 439
Joined: Fri Apr 22, 2016 5:16 pm

Re: Where do you keep your emergency fund?

Postby boglephreak » Thu Jan 12, 2017 1:50 pm

2/5 of my cash is in my checking account at 0%, and thats what i use to pay bills every month. any amount above 2/5 on the 16th and 2nd gets invested in taxable.

3/5 of my cash is in an ally savings account at 1%.

i am considering reducing the amount of cash on hand, but its not enough that its a significant hurry for me. it would probably cover 8-12 months of expenses (assuming both spouse and i lost job and no other income).

radiowave
Posts: 1119
Joined: Thu Apr 30, 2015 5:01 pm

Re: Where do you keep your emergency fund?

Postby radiowave » Thu Jan 12, 2017 2:14 pm

The problem with trying to avoid selling investments at the worst possible time is that it is rather difficult to tell when the worst possible time is (except in retrospect). Even after a market crash, the market could still go down more.


I've added a small amount of intermediate treasuries in our taxable account. My theory is if the market takes a nose dive, there will be a flight to quality as happened in 2008 and last February so I'll have at least some investments with a bump under those conditions as a backstop rather than selling equities at a loss.

As for online banks, I've been happy with Discover bank and card (5% gas first quarter). So like many posters that's our money capacitor.

I have a question about Ally Bank. Applied for savings/checking just before Jan 1 and wanted to get in on the 1.25% no penalty 11mo CD. Well the application is still languishing and they needed a photocopy of wife's drivers license. So we missed out on the 1.25%. Not very impressed with Ally right now. Is this typical?

User avatar
Whiggish Boffin
Posts: 238
Joined: Sun Dec 09, 2007 10:20 pm

Re: Where do you keep your emergency fund?

Postby Whiggish Boffin » Thu Jan 12, 2017 3:03 pm

A few days' living expenses in the cookie jar.
10 weeks in a negligible-interest savings account at my local bank (walking distance from home).
28 weeks in paper-certificate Series I savings bonds in the safe-deposit box.
20 weeks in electronic-format Series I savings bonds at TreasuryDirect.

I like the ease and safety of Series I savings bonds -- liquid (after owning for a year), inflation-protected, and safe from loss or default. The worst risk is that I'll lose the safe-deposit key, or forget my TD password.


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