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We just got the money from the sale of our previous house. We want to put this money away as our emergency fund but we do not know where to put it. what is better a money market fund, a CD or a savings account?
Thanks.
Depends how much it is. Ours is in the upper half of five figures and is divided between basic credit union savings (where the payroll direct deposit goes), credit union MMAs (the second tier) and CDs (which we would only tap in a true and dire emergency). It's also divided between three institutions. But the rule for the money is that it must all be available by walking into a building and asking to withdraw it, penalty or no, the next business day.
We just got the money from the sale of our previous house. We want to put this money away as our emergency fund but we do not know where to put it. what is better a money market fund, a CD or a savings account?
Thanks.
I say the highest interest of those three, making sure it's FDIC insured (FWIW). Money market funds are not FDIC insured, money market accounts are. Split among accounts; for example, if CD rates are the highest of the three by 1% or more, put the money you don't need for the span of the term in CDs. I'm using all three types of accounts, at multiple banks to stay under FDIC limits. Keep a close watch on what's happening to the banking situation; there is a possibility, however remote, that we'll have a major run on most banks, or that accounts will be frozen for a currency devaluation, a la Argentina. I hope/plan to buy a house again before that happens.
We want to have a 9-12 month emergency fund. We think our monthly expenses could be around 3k/month but I have to do the numbers. So it would be 27-36k.
Does anyone know any banks that offer good interest rates? We are considering Ing Direct at 1.65% APY.
Does ING Direct have a physical building you could walk to if need be? If not, then no. For one thing, if they can't do any better than 1.65% you could surely do as well with a local credit union. For another, remember the purpose of this money: to serve as an emergency fund. I'd probably have half in CDs and half in an MMA, at credit unions. It would depend partly on their dollar thresholds for better rates.
Keep a close watch on what's happening to the banking situation; there is a possibility, however remote, that we'll have a major run on most banks, or that accounts will be frozen for a currency devaluation, a la Argentina.
Maybe I should ask my relatives in Argentina what they think about our economy. What I remember from when I visited was that they all were economists. They all knew what was wrong with the country and what would fix it.
Does ING Direct have a physical building you could walk to if need be? If not, then no. For one thing, if they can't do any better than 1.65% you could surely do as well with a local credit union. For another, remember the purpose of this money: to serve as an emergency fund. I'd probably have half in CDs and half in an MMA, at credit unions. It would depend partly on their dollar thresholds for better rates.
ING does not have any building anywhere near where I live. The reason for the emergency fund is to keep up with mortgage payments and bills if my dh were to loose his job. I do not foresee a reason to need to take all the money out from one day to the next.
Does ING Direct have a physical building you could walk to if need be? If not, then no.
I agree. Use only banks with plenty of local branches, and not those closest to failure, unless too big to fail I guess. I chose JPMorganChaseWamu for most of my savings. If no local branch then I think you can expect worse service, with a greater possibility of no service when push comes to shove.
With my bank, in their highest tier, the money market account makes as much interest as their high tiered CDs. It makes higher interest than their highest tiered checking or savings. So, if I wanted to keep that money liquid and have easy access to it with out losing my accumulated interest (like a CD) I would put it in a money market account.
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