Where to put emergency funds?

[cookmg]

Hi all,

Where should I keep my emergency funds? High interest online savings account? Short term govt bond fund? Municipals for tax consideration?

Thanks.

[MrBlue]

I like bars of gold....

Actually just cash under my mattress for the true emergencies.

I believe ING and the like will take several days to transfer to your bank account for withdrawal.

[shark6]

[ QUOTE ]
I like bars of gold....

[/ QUOTE ]

Me to. It's my "emergency" emergency fund. It's the best investment going.

Otherwise, if you're talking about a regular emergency fund I'd recommend the high interest online savings accounts from ING Direct, Emigrant or HSBC Direct. It's FDIC insured and your principal is not at risk, plus you'll get close to or as good a rate as a short-term bond fund (which is another option).

[Sniper]

The answer to this depends somewhat on your risk tolerance, and should be determined as part of your overall financial plan. Just because it's "emergency" money, doesn't mean it shouldn't be working for you.

[sprmario]

A high yield savings is probably your best bet...

Unless by Emergency you mean:

1) OMG, the cops are coming after me and I need $10k cash to jet right at this second, or

2) OMG, Iran just manged to drop 20 nukes on us and we are going to be in some Road Warrior/Postman type post apocalyptic world.

Otherwise I'd just use my credit cards as true 24 to 48 hr emergency money and then transfer money from my savings to my checking to cover that. THere's a reason I have a totally empty $15k credit limit Visa sitting around.

[Sciolist]

I'm pretty sure that someone dropping 20 nukes on you is going to break the economy anyway, in which case you'd probably be best off with bars of gold, preferably in a lead lined box so they have a better chance of not getting radiated

[Big TR]

Vanguard MM presently has a 4.55% 7 day yield. EFT Link it to your checking account and you'll have the funds within a day or two.

[Yobz]

[ QUOTE ]
Vanguard MM presently has a 4.55% 7 day yield. EFT Link it to your checking account and you'll have the funds within a day or two.

[/ QUOTE ]

How do you do this? Do you have to sign up with Vanguard and get a money market account with them? Also, can't these things lose money (as opposed to ING which is FDIC insured and will get you 4%, which is not too much lower)?

[cookmg]

Thanks for the suggestions everyone. These are all options I've been considering. By emergency fund I'm really just hoping to have 6 months of expenses that will be available should I lose my job, car dies, or take some other financial hit. I'd like to avoid having to tap retirement accounts, float a balance on a high interest credit card, or pull money out of stock investments if things turn south for a little while. How do the tax liabilities compare between MM, savings, and short term bond funds? How much riskier is the MM and bond fund? Aren't the online savings accounts ROR going to fluctuate with other two?

[Wake up CALL]

In case you already have an account with BOA they currently have a special money market fund that yields 4.0% for a 150 day period with no penalty for early withdrawal. The minimim investment is $10,000 and is FDIC insured.