Where is the best place to put my emergency fund

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Topic Author
1010
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Joined: Wed Sep 30, 2020 4:04 pm

Where is the best place to put my emergency fund

Post by 1010 »

for the most interest seeing that the interest just continue to go lower and lower..
radiowave
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Re: Where is the best place to put my emergency fund

Post by radiowave »

1010 wrote: Wed Dec 30, 2020 9:18 am for the most interest seeing that the interest just continue to go lower and lower..
Welcome to the club. I still have some NWP CDs in the mid 2% range but expire in 2021. Best I can see in current environment without going through a lot of contortions is an online bank CD around .50% . . . at least it's FDIC insured. US Treasury I Bonds may be another option and will keep up with inflation.
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HomeStretch
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Re: Where is the best place to put my emergency fund

Post by HomeStretch »

Best interest rates for an emergency fund are likely for a high-yield savings account or no-penalty CD. Rates for brokerage money market funds and short-term US treasuries are lower. Check rates at online banks like Ally, Marcus, CapitalOne where you might see 0.5% per annum.
Topic Author
1010
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Re: Where is the best place to put my emergency fund

Post by 1010 »

thank you!
where do you find no-penalty CD?
also whats NWP CDs?
radiowave
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Re: Where is the best place to put my emergency fund

Post by radiowave »

1010 wrote: Wed Dec 30, 2020 9:30 am thank you!
where do you find no-penalty CD?
also whats NWP CDs?
https://www.ally.com/bank/no-penalty-cd/
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radiowave
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Re: Where is the best place to put my emergency fund

Post by radiowave »

Sorry, missed your second question, it stands for no withdrawal penalty. Essentially you put you money into the CD and after a short period, I think Ally is 6 days, you can withdraw from the CD without an interest penalty, typically a few months of interest depending on when you withdraw. Most NWP CDs are equivalent to a savings rate, either one is a good choice for short term savings/emergency fund.
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NabSh
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Re: Where is the best place to put my emergency fund

Post by NabSh »

Correct you can withdraw anytime after 6 days. Most other places the penalty is 180 days (6 months) for a 1 year CD.
The only drawback is that the CD is 11 month CD and the interest rate will probably stay at this range for a couple of years
mhop
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Re: Where is the best place to put my emergency fund

Post by mhop »

1010 wrote: Wed Dec 30, 2020 9:18 am for the most interest seeing that the interest just continue to go lower and lower..
Lake Michigan Credit Union. The hoops are worth the interest to me, have mine linked in to buy Amazon gift cards.
p1db
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Re: Where is the best place to put my emergency fund

Post by p1db »

If you don't need the money for 1 year or longer, then the Series I Savings Bonds issued by the US treasury is your best bet. Interest rates change every 6 months and are tied to the inflation rate. If you buy them now the interest for first 6 months is 1.68% APR. If you sell before 5 years you lose the last 3 months' interest. Even factoring in this loss, if you sell after 1 year, a bond purchased now will yield approximately 1.26%, assuming the next 6 month's interest rate remains unchanged. This rate is much better than any CD out there.
One downside is that only $10K can be invested per individual per calendar year. If you are a family of 4, then you can invest a total of $40K per year.

https://www.treasurydirect.gov/indiv/re ... .htm#irate
Robert20
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Re: Where is the best place to put my emergency fund

Post by Robert20 »

1010 wrote: Wed Dec 30, 2020 9:18 am for the most interest seeing that the interest just continue to go lower and lower..
My EF:

1. 30% in Checking Account Yield 1.3%
2. 20% in online Savings Account Yield 1.25%
3. 30% in VTEB
4. 20% in VTIP
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anon_investor
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Re: Where is the best place to put my emergency fund

Post by anon_investor »

Robert20 wrote: Thu Dec 31, 2020 8:19 pm
1010 wrote: Wed Dec 30, 2020 9:18 am for the most interest seeing that the interest just continue to go lower and lower..
My EF:

1. 30% in Checking Account Yield 1.3%
2. 20% in online Savings Account Yield 1.25%
3. 30% in VTEB
4. 20% in VTIP
Where are you getting those interest rates :shock: !
aarondearu
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Re: Where is the best place to put my emergency fund

Post by aarondearu »

Fran K
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Re: Where is the best place to put my emergency fund

Post by Fran K »

p1db wrote: Thu Dec 31, 2020 6:51 pm If you don't need the money for 1 year or longer, then the Series I Savings Bonds issued by the US treasury is your best bet. Interest rates change every 6 months and are tied to the inflation rate. If you buy them now the interest for first 6 months is 1.68% APR. If you sell before 5 years you lose the last 3 months' interest. Even factoring in this loss, if you sell after 1 year, a bond purchased now will yield approximately 1.26%, assuming the next 6 month's interest rate remains unchanged. This rate is much better than any CD out there.
One downside is that only $10K can be invested per individual per calendar year. If you are a family of 4, then you can invest a total of $40K per year.

https://www.treasurydirect.gov/indiv/re ... .htm#irate
I just bought my first $20k in I bonds (in my wife and my names) after a recommendation on this forum. It definitely seems like a better deal than a one-year CD in terms of return and tax advantages, it is also better than any longer-term CD you can find right now in terms of return and liquidity. One question I've had is what happens if I buy bonds in my children's names. Does this money become theirs in the same kind of way a custodial account works or can I buy it with their social security numbers but make it part of my portfolio?
You make more money selling advice than following it. -Steve Forbes
p1db
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Re: Where is the best place to put my emergency fund

Post by p1db »

I am not very sure, but I think the money remains under your control until the children turn 18.
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emlowe
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Re: Where is the best place to put my emergency fund

Post by emlowe »

Fran K wrote: Thu Dec 31, 2020 9:31 pm Does this money become theirs in the same kind of way a custodial account works or can I buy it with their social security numbers but make it part of my portfolio?
You create a minor-linked custodial account. It is linked to your primary account. You can buy/sell in there on your child's behalf until they turn 18. Bonds purchased in this account would belong to the child, but you have custodial rights.

(https://www.treasurydirect.gov/indiv/he ... rnMore.htm)
Minor Account: This is a custodial account that a parent, natural guardian, or person providing chief support establishes for a child under the age of 18. The Minor account is linked to your primary TreasuryDirect account and only you, as the custodian, can access the account. You may purchase, redeem, receive gift deliveries, and perform other transactions within the account on behalf of the minor. When your child reaches age 18 and establishes his/her own TreasuryDirect account, you may de-link the securities into their new account. De-linking refers to moving the Linked account's securities to a Primary TreasuryDirect account. Instructions for De-linking can be found on the How Do I...? link within the account. Once the minor account is de-linked it is deactivated and all new transactions within the minor account are prevented.

If you choose to maintain the Minor account once the minor reaches age 18, you are restricted from performing nearly all transactions, however, you can still purchase securities on the child's behalf. Minor linked accounts are not available in entity accounts.
Ferri Core 4: 40% Bonds | 6% Reit | 18% Total i18n | 36% Total US
Fran K
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Re: Where is the best place to put my emergency fund

Post by Fran K »

emlowe wrote: Thu Dec 31, 2020 10:09 pm
Fran K wrote: Thu Dec 31, 2020 9:31 pm Does this money become theirs in the same kind of way a custodial account works or can I buy it with their social security numbers but make it part of my portfolio?
You create a minor-linked custodial account. It is linked to your primary account. You can buy/sell in there on your child's behalf until they turn 18. Bonds purchased in this account would belong to the child, but you have custodial rights.

(https://www.treasurydirect.gov/indiv/he ... rnMore.htm)
Minor Account: This is a custodial account that a parent, natural guardian, or person providing chief support establishes for a child under the age of 18. The Minor account is linked to your primary TreasuryDirect account and only you, as the custodian, can access the account. You may purchase, redeem, receive gift deliveries, and perform other transactions within the account on behalf of the minor. When your child reaches age 18 and establishes his/her own TreasuryDirect account, you may de-link the securities into their new account. De-linking refers to moving the Linked account's securities to a Primary TreasuryDirect account. Instructions for De-linking can be found on the How Do I...? link within the account. Once the minor account is de-linked it is deactivated and all new transactions within the minor account are prevented.

If you choose to maintain the Minor account once the minor reaches age 18, you are restricted from performing nearly all transactions, however, you can still purchase securities on the child's behalf. Minor linked accounts are not available in entity accounts.
Thanks emlowe! If I am understanding correctly, I am essentially transferring this money to my child when I buy the I Bonds. Does this mean this would count towards the annual gifting limit?
You make more money selling advice than following it. -Steve Forbes
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emlowe
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Re: Where is the best place to put my emergency fund

Post by emlowe »

Fran K wrote: Thu Dec 31, 2020 10:17 pm
Thanks emlowe! If I am understanding correctly, I am essentially transferring this money to my child when I buy the I Bonds. Does this mean this would count towards the annual gifting limit?
This is my understanding yes
Ferri Core 4: 40% Bonds | 6% Reit | 18% Total i18n | 36% Total US
Robert20
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Re: Where is the best place to put my emergency fund

Post by Robert20 »

anon_investor wrote: Thu Dec 31, 2020 8:49 pm
Robert20 wrote: Thu Dec 31, 2020 8:19 pm
1010 wrote: Wed Dec 30, 2020 9:18 am for the most interest seeing that the interest just continue to go lower and lower..
My EF:

1. 30% in Checking Account Yield 1.3%
2. 20% in online Savings Account Yield 1.25%
3. 30% in VTEB
4. 20% in VTIP
Where are you getting those interest rates :shock: !
FIRSTTECH CREDIT UNION..
Topic Author
1010
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Joined: Wed Sep 30, 2020 4:04 pm

Re: Where is the best place to put my emergency fund

Post by 1010 »

Sorry if it’s a stupid question.

Can anyone please explain me what an I bond is.
And what the risks are.
Topic Author
1010
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Re: Where is the best place to put my emergency fund

Post by 1010 »

Also how do you buy it?
BHawks87
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Re: Where is the best place to put my emergency fund

Post by BHawks87 »

1010 wrote: Sat Jan 09, 2021 1:46 pm Sorry if it’s a stupid question.

Can anyone please explain me what an I bond is.
And what the risks are.
I Bonds are bought from the US Treasury. They have a fixed rate and a composite rate. The fixed rate and composite rate are determined twice a year. The fixed rate is currently 0% and is determined by current interest rates. The composite rate is currently 1.68% and is tied to the CPI so as inflation rises and falls the composite rate goes with it.

You can only buy $10k per year per social security number (can also buy $5k per year with a tax refund). You can't redeem them for 1 year and then after that if you redeem within the first 5 years you face a 3 month penalty.

There really is no risk as far as losing your money because they are backed by the US Treasury. Also, during deflation the composite rate can't go below 0% so you never lose your principal.

The only risk really is that your money is locked up for 1 year. A trick is that you can purchase at the end of a month and then you get interest for that whole month and it counts as if you bought it at the beginning of the month so your money is tied up for 11 months instead of a full 12.

To buy you have to set up an account at treasurydirect.gov. You can set up the account online but you may have to go to your bank and get a medallion stamp to verify your account and mail in a form. I had to do that because my identity couldn't be verified when I set the account up for some reason.
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Taylor Larimore
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Is an "Emergency" fund necessary?

Post by Taylor Larimore »

Bogleheads:

I do not own a seperate, low-yielding, "emergency" fund because I know that I can get money from my:

* Bank account
* ATM
* My portfolio
* Bank loan
* Family (last resort)

Strive for simplicity.

Best wishes
Taylor
Jack Bogle's Words of Wisdom: "Yes, investing is simple. But it is not easy, for it requires discipline, patience, steadfastness, and that most uncommon of all gifts, common sense."
"Simplicity is the master key to financial success." -- Jack Bogle
Saphomd
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Re: Where is the best place to put my emergency fund

Post by Saphomd »

Honestly, we all hope there is no emergency in the near future. If there is, in my opinion, I dont think we should go after the best interest rate out there. I have mine in a local Credit Union and its not the best rate in the world, but its there IF I need it.
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abuss368
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Re: Is an "Emergency" fund necessary?

Post by abuss368 »

Taylor Larimore wrote: Sat Jan 09, 2021 2:49 pm Bogleheads:

I do not own a seperate, low-yielding, "emergency" fund because I know that I can get money from my:

* Bank account
* ATM
* My portfolio
* Bank loan
* Family (last resort)

Strive for simplicity.

Best wishes
Taylor
Jack Bogle's Words of Wisdom: "Yes, investing is simple. But it is not easy, for it requires discipline, patience, steadfastness, and that most uncommon of all gifts, common sense."
Taylor taught me this years ago and in hindsight I am so thankful for that advice! We have one simple checking account and one money market fund.

Keep financial matters and life simple!

Tony
John C. Bogle: “Simplicity is the master key to financial success."
nix4me
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Re: Where is the best place to put my emergency fund

Post by nix4me »

In a taxable Brokerage Account invested in VTI.
surfstar
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Re: Where is the best place to put my emergency fund

Post by surfstar »

I have 6 accounts of $1k each that earn 5%
Netspend + Brinks account for 5
DFCU for #6

DW has the same. That gets us a good chunk of E-fund covered. Now we've been moving the rest from Ally / All America to I bonds.

Not sure if those 5% accounts are still available to new customers, and/or if you can still get multiple accounts per SSN - just wanted to brag a bit ;)
hoofaman
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Re: Where is the best place to put my emergency fund

Post by hoofaman »

Bitcoin
Francis42
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Re: Where is the best place to put my emergency fund

Post by Francis42 »

Robert20 wrote: Fri Jan 01, 2021 11:06 pm
anon_investor wrote: Thu Dec 31, 2020 8:49 pm
Robert20 wrote: Thu Dec 31, 2020 8:19 pm
1010 wrote: Wed Dec 30, 2020 9:18 am for the most interest seeing that the interest just continue to go lower and lower..
My EF:

1. 30% in Checking Account Yield 1.3%
2. 20% in online Savings Account Yield 1.25%
3. 30% in VTEB
4. 20% in VTIP
Where are you getting those interest rates :shock: !
FIRSTTECH CREDIT UNION..
Love the tiered approach. I do the same with vteb.

You might want to check those interest rates. Those aren’t the current rates quoted by first tech.
Robert20
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Re: Where is the best place to put my emergency fund

Post by Robert20 »

Francis42 wrote: Sun Jan 10, 2021 6:52 am
Robert20 wrote: Fri Jan 01, 2021 11:06 pm
anon_investor wrote: Thu Dec 31, 2020 8:49 pm
Robert20 wrote: Thu Dec 31, 2020 8:19 pm
1010 wrote: Wed Dec 30, 2020 9:18 am for the most interest seeing that the interest just continue to go lower and lower..
My EF:

1. 30% in Checking Account Yield 1.3%
2. 20% in online Savings Account Yield 1.25%
3. 30% in VTEB
4. 20% in VTIP
Where are you getting those interest rates :shock: !
FIRSTTECH CREDIT UNION..
Love the tiered approach. I do the same with vteb.

You might want to check those interest rates. Those aren’t the current rates quoted by first tech.
Those are the rates on my account (upto 10K limit) in FTCU..
sgm7091
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Re: Where is the best place to put my emergency fund

Post by sgm7091 »

Treasurydirect.gov tries to verify your identity by asking a few challenge questions from transactions in credit report - it seems. If that fails for some reason, you have to get offline method like suggested. I was able to create an account for DW last year and did not have to get medallion or other offline methods to verify.
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Moondawg
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Re: Where is the best place to put my emergency fund

Post by Moondawg »

I transfer my bitcoin to BlockFi to earn 8.6%...







... I, of course, kid. It's all sitting at Ally :(
Francis42
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Re: Where is the best place to put my emergency fund

Post by Francis42 »

Robert20 wrote: Sun Jan 10, 2021 9:21 am
Francis42 wrote: Sun Jan 10, 2021 6:52 am
Robert20 wrote: Fri Jan 01, 2021 11:06 pm
anon_investor wrote: Thu Dec 31, 2020 8:49 pm
Robert20 wrote: Thu Dec 31, 2020 8:19 pm

My EF:

1. 30% in Checking Account Yield 1.3%
2. 20% in online Savings Account Yield 1.25%
3. 30% in VTEB
4. 20% in VTIP
Where are you getting those interest rates :shock: !
FIRSTTECH CREDIT UNION..
Love the tiered approach. I do the same with vteb.

You might want to check those interest rates. Those aren’t the current rates quoted by first tech.
Those are the rates on my account (upto 10K limit) in FTCU..

Ahhhh gotcha - thanks for clarifying the tiered interest rate!
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