Emergency Fund: Why Money Market??

[IdealFugacity]

The financial advisors who gave a seminar at my college this weekend said the same thing.

Why not keep emergency funds in a high-yield savings account, rather than one which "seeks to maintain a stable share price"? Or even a checking account, which is at least FDIC insured?

[alekhine8]

[ QUOTE ]
The financial advisors who gave a seminar at my college this weekend said the same thing.

Why not keep emergency funds in a high-yield savings account, rather than one which "seeks to maintain a stable share price"? Or even a checking account, which is at least FDIC insured?

[/ QUOTE ]
Vanguard has pretty good rates on their money market accounts, usually higher than all those high-yield savings accounts. And they're not promo rates or anything. I can sleep at night knowing it'll be $1/share tomorrow.

I think having the fund is far more important than what you have it in. MMA/CD/savings, who cares.

[IdealFugacity]

I guess they just give you more shares at $1 a share then?

[hlacheen]

yes

[captZEEbo]

most people don't realize that at today's rates, savings accounts are at 5%+. There is also some fear among older people to invest in an online bank.

In my personal finance class, I brought this same idea up and he was basically like "what savings account could get 5%?" and he was like, "oh.....INTERNET bank".

But yeah, they're essentially the same.

Also, a checking account is a bad idea, because you want to make some money on your money, but not so much money that you risk losing your emergency fund.

[TheMetetron]

Put it in a bond fund like the one below?

https://flagship.vanguard.com/VGApp/...FundIntExt=INT

[bav]

[ QUOTE ]
Put it in a bond fund like the one below?

https://flagship.vanguard.com/VGApp/...FundIntExt=INT

[/ QUOTE ]
I keep most of my spare ready-to-go cash in an ultra-short bond fund. The above is just a short-term bond fund so it may have more fluctuations. Doesn't make it bad, though. Just realize if interest rates twitch the fund price may twitch the other way a bit more in a short-term fund than an ultra-short fund. Something like, say, MWUSX.

[TheMetetron]

[ QUOTE ]
[ QUOTE ]
Put it in a bond fund like the one below?

https://flagship.vanguard.com/VGApp/...FundIntExt=INT

[/ QUOTE ]
I keep most of my spare ready-to-go cash in an ultra-short bond fund. The above is just a short-term bond fund so it may have more fluctuations. Doesn't make it bad, though. Just realize if interest rates twitch the fund price may twitch the other way a bit more in a short-term fund than an ultra-short fund. Something like, say, MWUSX.

[/ QUOTE ]

Yeah, I'd be pretty comfortable with small fluctuations in an emergency fund short term. I think the worst year ever was like -.1% for the fund which is acceptable.

[TLC]

Like bay, I'm a proponent of ultra-short bond funds. I personally use SWYSX.