Inflation is killing part of my Emergency fund

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jazzykat
Posts: 166
Joined: Wed Mar 30, 2011 4:49 pm

Inflation is killing part of my Emergency fund

Post by jazzykat »

My "high yield" online savings account just dropped its APY AGAIN. That's twice in the last 2 months.

Other than convenience, there is really no reason to stay with them any more. The ultimate in convenience would be to leave them completely so I can have 1 less bank account.

I'm curious what everyone is doing with their short term (as opposed to I-bonds and CDs) liquid emergency fund right now because I am really frustrated watching my savings get eaten by inflation.

I'm looking at going to ally bank as they don't seem to screw around with their rates that much.
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brisni
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Location: Austin, TX

Post by brisni »

Any savings account is not likely to keep up with inflation unless you continually add to it to do so. Check out www.depositaccounts.com for best rates and other advice.

- Brian
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Sheepdog
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Location: Indiana, retired 1998 at age 65

Post by Sheepdog »

I have a high yield checking account which pays 3.04% annualy. If is FDIC insured. I can have as much as $50,000. I have $30,000 in there now. I only have to jump a few hoops to get that....8 debit card purchases and 1 ACH deposit or 1 ACH payment each month. That is easy. I will be using part of that next year to buy an auto. My account is only available to residents of Indiana (Lake City Bank) https://www.lakecitybank.com/
If you are interested, you should be able to find one in your state. This link shows banks nationally, http://www.depositaccounts.com/checking ... ounts.html At this site you can filter it to find high yield checking accounts available only in your state.
Jim
All that truly matters in the end is that you loved.
jebmke
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Post by jebmke »

mix of limited term and intermediate term muni funds. Average yield is probably around 2.8% after tax.
When you discover that you are riding a dead horse, the best strategy is to dismount.
JoeJohnson
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Post by JoeJohnson »

getting 4.25% on up to $25k @ local credit union "Rewards Checking"
Topic Author
jazzykat
Posts: 166
Joined: Wed Mar 30, 2011 4:49 pm

Post by jazzykat »

JoeJohnson wrote:getting 4.25% on up to $25k @ local credit union "Rewards Checking"
Can you share a link to it. That is yielding higher than nominal treasuries!
JoeJohnson
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Joined: Wed Jun 08, 2011 2:34 pm

Post by JoeJohnson »

University of Iowa Community Credit Union (sorry I'm too new to post links?)

only available to local residents

use the link provided earlier, and filter for National availability or for your local area :)
Topic Author
jazzykat
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Joined: Wed Mar 30, 2011 4:49 pm

Post by jazzykat »

I should have mentioned I'm an expat, so I don't think local only offers apply to me since I am a resident of no state.
Johm221122
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Post by Johm221122 »

I only keep 2 months in cash at Internet bank,the rest in savings bonds.Tax deffferal,good return,safe and instant advailblity( after 1 year)
campy2010
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Post by campy2010 »

I know the feeling. My RCA also fell from 4% in January to 3.25% in March and now to 2.75%. The other local RCA interest rates have also declined in kind. Soon I will have to find somewhere else to put my cash.
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archbish99
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Laddered CDs

Post by archbish99 »

I would consider putting some of it in long-term CDs somewhere with a low early-redemption penalty. (Ally is only 60 days of interest.) Leaving it alone for four months or more nets you a higher interest rate after the penalty than most savings accounts. Assume you'll need to tap it sometime and factor the penalty in -- if you wind up not needing it for the whole five years, the lack of penalty is a bonus. As you add more money, you can ladder the CDs. If you need to take money out, always break the lowest-yield CD, since the penalties will be equal.

This is what I would be doing myself, but my wife is loyal to our bank despite the .199% we're currently getting.
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nisiprius
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Post by nisiprius »

Sometimes bank accounts and other cashlike vehicles just don't keep up with inflation. Sucky but it happens from time to time. There are no good a answers but grin and bear it and hope it doesn't last
too long.

I bought $5000 worth of I bonds. I keep my Reward Checking balance close to the $25000 maximum. The rest is in my 1% ING Direct account. I no longer have anything in money market funds.

The big thing is to keep calm and not invest in some crazy thing you'd never have put your emergency funds in before.

If inflation really digs in, eventually bank rates will rise and I have an old bankbook showing a 13% interest rate to prove it.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
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joe8d
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Post by joe8d »

I'm looking at going to ally bank as they don't seem to screw around with their rates that much.
That what I did and probably is the best you can do given the present interest rate conditions.
All the Best, | Joe
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DaveTH
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Post by DaveTH »

I'm looking at going to ally bank as they don't seem to screw around with their rates that much.
Interesting perception. My experience has been that Ally is constantly adjusting yields, sometimes several days in a row. The one bank that seems to keep rates unchanged for relatively long periods is Amex High-Yield Savings.
letsgobobby
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Post by letsgobobby »

you could buy i-bonds with at least a portion of your EF, as long as you are sure you won't need that portion within 12 months. before you say anything, some people do keep an EF that doesn't need to be entirely liquid for 12 months.
expat
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Post by expat »

If you're an expat, you can presumably hold your emergency fund in a foreign currency. euro savings accounts are paying between 2 and 3 percent.
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MossySF
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Post by MossySF »

3 month CDs in China are up to 3.9%. 6mo for 4.1%.
digit8
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Post by digit8 »

I mentally wrote off my EF the day I started it. To me, it's not there for returns or any other thing than being easily available in times of desperate need.
scrabbler1
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Post by scrabbler1 »

jebmke wrote:mix of limited term and intermediate term muni funds. Average yield is probably around 2.8% after tax.
Intermediate-term (national) muni bond fund. It pays just under 4% which is tax-free federally and mostly taxable at the state level. I am not counting the $2k I keep in my local bank's checking account as a conduit to handle all the day-to-day cash inflows and outflows while avoiding any monthly fees.
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