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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.
Only if you're willing to have the fund decline in value.
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
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.
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
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.
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."
I would trust Ally more than Wells Fargo.
http://fortune.com/2017/08/31/wells-far ... tim-sloan/
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
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.