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Old 06-01-2015, 10:21 PM   #1
bimmerfan08
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Suggestions on where to allocate emergency savings fund?

So I've have had my emergency fund socked away for years in my credit union savings account and haven't touched it. The APY is a measly 0.05%. I'm looking to maximize the APY and have some return on investment without forgoing the ability to liquidate emergency savings if I need it in a pinch.

Are high interest online savings accounts the way to go?

Other suggestions?

Should I just stick with what I have?
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Old 06-02-2015, 05:56 AM   #2
5ynd1cat3
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I'm sure Wrasil will chime in with some knowledge but this is my take:

Emergency fund is for emergencies. Not investing, not bouncing around, emergencies. It's also 100% liquid so I can get to it if I need to. Cash money in the safe.

I'm sure someone will say I'm stupid for not turning that $$ into more $$ but this is how I chose to do things. Everything is separate. Investments, oh sh!t money, living expenses, etc.

Personally, I leave mine alone unless I need it. Even if a bank next door offers me an extra 0.015% interest it stays put. Having an emergency fund is friggin awesome, especially when your furnace goes out on New Year's Day and it's a balmy 45 degrees inside your house. Turns what to some would be a major catastrophe into a minor inconvenience. Ymmv.
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Old 06-02-2015, 06:06 AM   #3
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I would think it depends on how much you want in your emergency fund. I'd keep it as cash at home or the way you are now. If you have excess... Invest that but leave your emergency fund alone.

I keep some cash at home but have the rest of the fund in a local bank for easy access if needed.
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Old 06-02-2015, 09:16 AM   #4
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The simple answer is that your emergency savings isn't there to grow, it's there to protect your financial interests in the event of an emergency. For that reason, the overriding concerns with emergency savings are ensuring it is adequate and available, not growth. With current interest rates you aren't likely to see any growth in a safe and accessible account.

IF you have additional capital, and sufficient discipline, and expertise, THEN it is possible to mix the savings with other capital and take additional risk for the prospect of growth, but that isn't the case for most people. Even in those cases, some of the emergency savings should be kept in immediately available accounts such as savings/checking accounts. So, the general rule of thumb is "screw growth" and just keep that emergency savings available and protected from loss.
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Old 06-02-2015, 09:20 AM   #5
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I have mine in boring stuff like municipal bonds. Safe, accessible enough if needed, and you get a little bit of growth compared to a savings account.
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Old 06-02-2015, 09:50 AM   #6
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I would stay away from anything that locks them up (ie, CD's) but there are a bunch of online savings accounts that have decent rates. Ally Bank comes to mind.
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