Join Early Retirement Today
Thread Tools Display Modes
Where should I put these emergency funds?
Old 02-04-2008, 09:04 AM   #1
Posts: n/a
Where should I put these emergency funds?

My emergency money is split between a money marekt fund and a CD. The CD coming due this week and I was going to keep that money in my money market fund. Are there other alternatives that I should consider?
  Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 02-04-2008, 09:09 AM   #2
Thinks s/he gets paid by the post
Join Date: Feb 2007
Posts: 1,015
Right now the MMF is probably as good a place as any given the low CD rates.
Achiever51 is offline   Reply With Quote
Old 02-04-2008, 09:16 AM   #3
Thinks s/he gets paid by the post
Join Date: Jan 2008
Posts: 2,020
I have a similar question. We have about half of our emergency fund in a money market and the remainder in a CD ladder. We've been thinking of rolling the CD portion into I bonds as they mature. I've read some previous posts on I bonds but I'm not quite sure what the current sentiment is.
Marquette is offline   Reply With Quote
Old 02-04-2008, 01:51 PM   #4
Recycles dryer sheets
Join Date: Jan 2007
Posts: 131
For ease of maintenance I just have my emergency fund sitting in a decent savings account (4.05% EmigrantDirect) that is very accessible and has no associated fees.

If it were a larger sum I'd probably spend more time with it, but my only requirements are that it not lose purchasing power and be easy to get at. So far the rates have stayed relatively competitive.
jblack is offline   Reply With Quote
Old 02-04-2008, 01:53 PM   #5
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
clifp's Avatar
Join Date: Oct 2006
Posts: 7,733
I think emergency funds should be in a money market, or perhaps very short 3 month or less CDs. The problem with IBonds if you pay a penalty if you redeem them in less than five years, similar to CDs. If the flood, accident, kid gets arrested and needs bail money, you want to be access your funds immediately.
clifp is offline   Reply With Quote
Old 02-04-2008, 02:27 PM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
Join Date: Aug 2006
Posts: 12,483
Stick with the money market fund.........
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)

This Thread is USELESS without pics.........:)
FinanceDude is offline   Reply With Quote
Old 02-04-2008, 07:25 PM   #7
Thinks s/he gets paid by the post
Join Date: Jan 2008
Posts: 2,020
Well, the reason, in our case, that I was considering the i bonds is because the cash in the MM is "we just crashed our only car into the basement and broke a water main" type of on hand cash whereas the CD ladder is the "I just lost my job, I need a stream of income monthly over the next x months". In that case, should I still knock it off and just keep it all in a MM or would ibonds be acceptable? (gambling with the fact that I'm in a pickle if I lose my job before a year is up on the ibond).
Marquette is offline   Reply With Quote
Old 02-04-2008, 08:12 PM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Jun 2005
Posts: 10,252
We had our emergency money parked in a tax exempt money market fund making 2.7% (our marginal rate is 34%), so I'm thinking I can do better than this.

So I exchanged a stock fund in an IRA and bought VFIIX the Vanguard GNMA fund yielding about 5%. Since it's in a retirment account, the dividends are tax-free (well, really deferred). In the taxable account, I exchanged the tax-exempt money market fund for the Vanguard total stock market fund.

So I now have my emergency fund earning a tax-free 5%. As a bonus, if stocks go down, I would not have been able to deduct the loss on taxes if that stock fund was still in my IRA. But now that it is in a taxable account, I could sell for a loss and deduct that against other capital gains.

Bottom line: Your emergency fund could be in your IRA and save you some bucks.
LOL! is offline   Reply With Quote
Old 02-04-2008, 08:22 PM   #9
Thinks s/he gets paid by the post
jIMOh's Avatar
Join Date: Apr 2007
Location: west bloomfield MI
Posts: 2,223
I keep my Emergency fund in a 90 day CD ladder. 3 CDs, each with 1 month expenses in it. Just keep rolling it over.

I have heard (read) in similar forum to this one that the long term yield of a CD ladder is higher than a money market. I think the CD ladder needs to be 3-4 years out though to lock in higher rates for longer periods. If CD rate is less than 3%, I would keep CDs short term or go with money market. If you can lock in 4% over a 2 or 3 year period, I think the CD guarantee is much better than the fluctuating return of a money market.
Light travels faster than sound. That is why some people appear bright until you hear them speak. One person's stupidity is another person's job security.
jIMOh is offline   Reply With Quote
Old 02-05-2008, 08:15 AM   #10
Posts: n/a
Thanks for all of the replies, I guess I will saty with the money market fund.
  Reply With Quote

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off

Similar Threads
Thread Thread Starter Forum Replies Last Post
(FAQ archive): Invididual Stocks vs. Funds/Active Funds vs. Passive Funds Nords Early Retirement FAQs 0 10-22-2007 03:07 PM
Emergency funds Tiger FIRE and Money 16 10-11-2007 09:37 PM
Emergency Funds Tiger FIRE and Money 14 05-14-2007 01:54 PM
Where should I put taxable after-emergency fund money? Olav23 FIRE and Money 6 03-24-2007 07:35 PM
Savings and Emergency funds for ER free4now FIRE and Money 16 01-22-2006 08:21 AM

» Quick Links

All times are GMT -6. The time now is 07:19 AM.
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.