Comments on: Where should you keep your Emergency Fund?

By: Sting

Sting — Fri, 22 May 2009 07:27:28 +0000

Emergency fund should be keep in safe so that every time you look at it, it will be easier for you. Saving in an emergency fund is a necessity compare of buying luxuries. Since every countries economy suffers due to recession we should be more optimistic.

By: Joshua

Joshua — Thu, 30 Oct 2008 17:41:36 +0000

Again, with fair warning, remember to make sure that your savings vehicle is FDIC insured. You will need to check with your particiular bank or brokerage office to find out, but not all are the same, so read the fine print.

BTW – ING still seems to have the most versatile savings accounts and online checking, all of which are FDIC insured, but they have recently lowered their interest rate and increased the time on funding.

By: John

John — Thu, 16 Oct 2008 03:55:37 +0000

Thanks for the tips, guys. I am actually very conservative with my emergency fund and just have it all in an online savings account. When it was earning more than 5% it was a no-brainer – it was very safe and earned a decent rate as well.

@WiseMoneyMatters – do you use a stock fund or a bond fund?

@ChristianPF – have you found short-term CD rates that make it worth the extra hassle?

By: WiseMoneyMatters

WiseMoneyMatters — Wed, 15 Oct 2008 14:39:20 +0000

I keep mine under my mattress.

I really like Consumerism Commentarie’s line of thinking of spreading your emergency fund out. My thoughts are to put $1000 in a super easy and accessible area such as a bank savings account linked to your checking.

Then put a months worth of expenses in something like one of the high interest online bank accounts.

Finally put 3 months worth of expenses in some sort of index fund. This can be pulled out in times of dire emergency, but in reality, you should never have to touch it and you can just let it accumulate into 6 months or more worth of savings. If the market crashes (like it did a week ago) you should still have at least a few months worth of savings to pull out on top of the other 2 savings accounts I listed in case of such an emergency.

The big thing I would warn against is using the stock market too much as a basis for an emergency fund. When the economy is at is lowest is when the highest likelihood of a layoff to occur, thus creating an emergency when your stocks (and your emergency fund) are taking the greatest hit. They work against each other that way.

By: ChristianPF

ChristianPF — Wed, 15 Oct 2008 14:33:48 +0000

I agree about your point that it should be safe money. I think putting it in stocks defeats the whole purpose, like you mentioned in your worst case example. Because I am a bit more tolerant of risk than some, I have split my emergency fund. So, say half of it is in a high yielding savings account and the other half is in a higher yielding short term CD. I figure most emergencies can be handled by half of it in savings, and if it is a big enough emergency, it won’t be a big deal to bust out of the CD early and would only cost me a few bucks in lost interest.