Where to allocate a $20,000 emergency fund

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ROOKIE_INVESTOR
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Joined: Sun Jan 22, 2017 7:18 pm

Where to allocate a $20,000 emergency fund

Post by ROOKIE_INVESTOR »

Wife and I currently have a $20,000 emergency fund in a Credit Union savings account. Where would be the best place to allocate this money for it to grow and remain liquid if needed? Would a money market account be a prudent choice? Thank you.
runner3081
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Joined: Mon Aug 22, 2016 3:22 pm

Re: Where to allocate a $20,000 emergency fund

Post by runner3081 »

No penalty CD or cash in an online savings account.

Don't do anything else with it.

Also, you can search for emergency fund on the forum and see hundreds, if not, thousands of posts :)
TonyDAntonio
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Re: Where to allocate a $20,000 emergency fund

Post by TonyDAntonio »

How about $10,000 in Ibonds for you and your wife?
sport
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Location: Cleveland, OH

Re: Where to allocate a $20,000 emergency fund

Post by sport »

TonyDAntonio wrote: Thu Nov 09, 2017 3:41 pm How about $10,000 in Ibonds for you and your wife?
I bonds cannot be cashed during the first year. If someone wanted to use this for an E fund, they should stagger the purchases.
brad.clarkston
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Location: Kansas City, MO

Re: Where to allocate a $20,000 emergency fund

Post by brad.clarkston »

Leave it where it is.

I have $30k in a Ally account so I can get it right away (debit card) and then another $30k in a bond ladder.
Topic Author
ROOKIE_INVESTOR
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Joined: Sun Jan 22, 2017 7:18 pm

Re: Where to allocate a $20,000 emergency fund

Post by ROOKIE_INVESTOR »

What about $10,000 in Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX) and the other $10,000 in the money market?
Last edited by ROOKIE_INVESTOR on Thu Nov 09, 2017 4:08 pm, edited 1 time in total.
Gill
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Re: Where to allocate a $20,000 emergency fund

Post by Gill »

ROOKIE_INVESTOR wrote: Thu Nov 09, 2017 4:03 pm What about $10,000 in Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX) other $10,000 in the money market?
Only if you're willing to have the fund decline in value.
Gill
Cost basis is redundant. One has a basis in an investment | One advises and gives advice | One should follow the principle of investing one's principal
sport
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Re: Where to allocate a $20,000 emergency fund

Post by sport »

Vanguard Prime Money Market has a yield of 1.14%. If you are willing to have a little fluctuation in value, Vanguard Ultra Short Term Bond fund has a yield of 1.61%. Either would be a sensible choice for an E fund.
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eye.surgeon
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Re: Where to allocate a $20,000 emergency fund

Post by eye.surgeon »

Ally savings currently yields 1.25% and a no-penalty 11 month CD that can be instantly cashed is 1.5%.
"I would rather be certain of a good return than hopeful of a great one" | Warren Buffett
coincollector
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Re: Where to allocate a $20,000 emergency fund

Post by coincollector »

You can always go with a money market mutual fund or a short term Treasury ETF or mutual fund. The odd thing right now is that both these options are yielding no better than an online savings account. Hopefully as rates start to rise we'll see better returns.
Mr.BB
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Re: Where to allocate a $20,000 emergency fund

Post by Mr.BB »

That money is for emergencies....not investing. I wouldn't put in anything risker than a CD or money market. It should be somewhere that you can access immediately. We keep ours at are credit union and it pays 1.16% Considering that is a checking account it pays almost as good as some CD's and I can get at the money anytime, with no penalty's.
"We are what we repeatedly do. Excellence, then, is not an act, but a habit."
arsenal_fan
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Re: Where to allocate a $20,000 emergency fund

Post by arsenal_fan »

Sorry to hijack this thread, but I too have some cash sitting around in a Wells Fargo account, close to $30000. Is an Ally savings account trustworthy enough to transfer all that money into?
spoonfork
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Re: Where to allocate a $20,000 emergency fund

Post by spoonfork »

Yes, Ally is FDIC insured up to 250,000 like normal banks. Many people here use it.
Perkunas
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Re: Where to allocate a $20,000 emergency fund

Post by Perkunas »

Ally no-penalty 11-month CD @ 1.5%

Live Oak Bank savings account 1.4%
aristotelian
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Re: Where to allocate a $20,000 emergency fund

Post by aristotelian »

arsenal_fan wrote: Thu Nov 09, 2017 8:19 pm Sorry to hijack this thread, but I too have some cash sitting around in a Wells Fargo account, close to $30000. Is an Ally savings account trustworthy enough to transfer all that money into?
I would trust Ally more than Wells Fargo.
http://fortune.com/2017/08/31/wells-far ... tim-sloan/
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aj76er
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Re: Where to allocate a $20,000 emergency fund

Post by aj76er »

FYI: I believe the Ally No penalty CD rate of 1.5% requires a minimum investment of 25k.
"Buy-and-hold, long-term, all-market-index strategies, implemented at rock-bottom cost, are the surest of all routes to the accumulation of wealth" - John C. Bogle
mega317
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Re: Where to allocate a $20,000 emergency fund

Post by mega317 »

All of the options presented here, with the exception of I bonds, yield within about 0.5% of each other. That's 100 bucks a year, taxable, for the OP. I recommend you do whatever you find most convenient and don't think about it again.
https://www.bogleheads.org/forum/viewtopic.php?t=6212
Lindawilliams1960
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Re: Where to allocate a $20,000 emergency fund

Post by Lindawilliams1960 »

I have money in Alley earning 1.25%
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