cheapie

As I'm looking around trying to figure out where to place my 6-month emergency fund, all of the ideas I'm looking at are outdated. Even the stuff from last fall. Sheesh.

My credit union is offering 1% on a money market fund for $10k+. ING/HSBC are only at 2.25% ish.

It's not hardly worth putting it somewhere for a 1.25 gain over my credit union.

30-year treasury bills are at around 5%. that's about the best i've found. but i gotta leave it in there for at least a year and if i withdraw the funds before 5 years, i lose the last 3 months of interest.

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InfiniteNothing

Keep your emergency fund liquid. It's probably fine where it is. If you really wanted to be slick you could try staggering CDs so that you'd have one mature every month in case of job loss.

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cheapie

that's what i was thinking about doing. getting 2-3 rotating CDs.

ray

i keep some of my cash floating in CDs from ING Direct ranging from 6 months to a year.

Daedalus

Can you give more info on buying the t-bills? I'd be happy to lock in 5% for at least a year. I bought several staggered CDs from GMAC in December @ ~4%.

brainsmile

I get 15% a year

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VTGreg

If you get a decent interest rate from your bank (ING is around 1.5% right now), you won't make much, if any, more in a cd unless you lock in a for a long period.

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attgig

i have some money in flagstar express money market which has been giving me better rates than anywhere else.

https://www.flagstar.com/personal/sa...neyMarket.html

the rates have been about .25 - .75 % higher than ing, hsbc, or emigrant direct.

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zippyjuan

Buying a Treasury note you do not intend to hold until it matures has risk you may not think of. T-notes are sold at a discount to their face value- they are worth the full amount when they mature- you can buy say a $10,000 note for $9,900 to get a one percent return on it. If the interest rates go up in the future, (say they are now going for $9,500 or five percent). If you want to sell yours at the same time, you will not be able to get $9,900 for it so you would actually lose $400 on it- a negative return.

A couple of ways you can go if you want to do Treasuries. One is to buy short terms- but they are below one percent returns on most yields below five year terms. Second you can buy the inflation indexed Treasuries. These are shorter maturities and also have smaller minimum purchase requirements. Or you could put the money into a treasury mutual fund which holds their securities until they mature.

One problem with them for your six month fund is liquidity. Could you get the money out fairly quickly if you should need it in an emergency? I would keep to things like CDs or money market funds for that- even though they do not offer that much return. Or balance it- put three months in a liquid account and three months worth in a bit less liquid investment.

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InfiniteNothing

Good point!

Daedalus

Yes, that matches how I understand treasuries to work. But that differs from what Cheapie wrote, hence my question. If I can lock in a 5% rate with only 3 months interest penalty worst case for cashing out early, I would roll my CDs into it as they mature. Also, I know how to price them, but I have no idea where you actually buy treasuries. I thought they were only sold to institutions.

cheapie

not t-bill, I savings bonds. and i don't know anything about them other than what i read here: http://www.savingsbonds.gov/indiv/pr...nds_glance.htm

renovation

i wouldn't put any money in a money market account. when i was out of town a while back .(WIFE)she had the credit union talk her into one of them. i was so pissed when i found out it payed less then a interest checking account. i wire transferd a large some to her. and it was my fault for not telling her were to depost it.
after that advice i moved the funds out to a real bank.and we have used that credit union for over 30 years. they loss the use of my money over it. we still have her pay check going there but thats used for bills so its gone about as fast as it arrives.
don't trust bankers is what im getting at even if you have been with them for years and you think they are your friends.

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