Emergency Savings

[golfgal]

Personally I would put them into a longer term CD to earn the highest rate possible and then if you need the cash at some point, most banks will give you a loan with that as collateral. The interest you would pay for the few months you would need it would be much less then any early withdrawal penalties. You could stagger half at 6 months and half at 12 months but I would put it all in a 12 month CD.

[Dave1215]

With current rates don't assume longer term is a higher rate. Check around. Depending on how/when the banks need the money, there are times that short-term is better money than long-term. Also, the difference in the rates may not justify the additional rate you'd pay for the loan to gain your liquidity in an emergency.

[ndfmnlf]

A Treasury money market fund.

[pghquest]

Originally Posted by Shikaka805

Hello Everybody!!!

I have finally saved 6 months worth of living expenses...but what should I do with it? Do you recommend I put it just into a bank account? CD? Mutual Funds?

Since it is an emergency fund I know it needs to be liquid, but I don't want it just sitting there doing nothing. However, for CDs there are penalties for withdrawing money early.

I appreciate all your help!

Congragulations!!.. Thats a great accomplishment.

Do you have a home? If so, go get a home equity line of credit, apply the funds onto your home loan.. The interest you would save is more then what you'll make on any savings, and the cash is always redily available.

If you dont, forget this idea and listen to other opinions..