Where to put emergency funds?

[jthegreat]

I plan on doing the same thing and I'm going to use an Emigrant Direct account.

[Big TR]

You just go to Vanguard and choose to open an account. You setup your bank to be linked to it via EFT.

I can't think of a single high profile case where a MM account broke the $1. You are correct that it is not FDIC insured, but the risk of it going broke is next to nothing. It basically invests in short term government bonds.

I don't think the negligible risk of it breaking the $1 is worth .5%.

[Misfire]

I keep a grand in an interest-bearing checking acct for an emergency where I might need the money immediately. The rest is in an online money market account.

[sprmario]

MM accounts invest in commercial paper not short treasuries.

[ QUOTE ]
You are correct that it is not FDIC insured, but the risk of it going broke is next to nothing. It basically invests in short term government bonds.


[/ QUOTE ]

[Big TR]

Fair enough. My Vanguard a/c is 40% commercial, 40% CD's and 15% us Govt.

[jar]

The risk of losing money in a money market fund with a big house like Vanguard is so close to nil as to not matter. Any events that could cause Vanguard PMM to break the dollar would be so big that they'd probably totally collapse the US economy anyway.

[cookmg]

Well a MM with Vanguard seems like a good option. I'm still curious about the tax issues. With MM and savings accounts I would imagine the yield is taxable as income correct? With a short term bond fund, are all of the gains taxable as income too?

Thanks

[Big TR]

Savings and MM's would be taxable income.

Your taxable income on a Bond fund would be your quarterly dividends. Any gains through price appreciation would be deferred until you sold the bond fund.