Suddenly, our EF just sitting there in a savings account doing nothing has started to bother us.
So we've been playing with the ideas of putting some of it in vanguards SP500 fund, a tiny bit in stocks, and a little bit more in mutual funds. Maybe it is the effect of the dip (want to buy some when its low)...
I just feel that considering how hard it is to save, money should be doing something. So I have this "tiered" emergency fund idea: first tier is liquid, immediately accessible, second is almost liquid (like CDs) and a third one is investment. We would not need a third one unless we are in major trouble.
Update: darn it, the market is up today!
We both got the itch.
August 29th, 2011 at 05:08 pm
August 29th, 2011 at 05:50 pm 1314640243
One CD laddering strategy I have used in the past was to buy a CD on the first of each month, so that eventually I had 12 CDs plus a savings account. That way, the bulk of your money is in CDs but you always have one maturing within 30 days or less, plus your savings is immediately available. I would divide my total EF (savings + CDs) by 13, and that is the amount I would put into a CD on the first of each month.
August 29th, 2011 at 05:55 pm 1314640529
August 29th, 2011 at 09:16 pm 1314652616
Also check out ING - its just 1%, but better than .035%.
Maybe check out Ibond rates as a learning experience - the composite is reasonable, but the fixed rate component sucks. You have to hold your money in at least a year if you don't want a penalty. I'd wait until the fixed rate goes above 0%. Rates change May 1 and November 1.
Finally, if you want to put a toe into equities and scratch the itch, think about checking out a dividend fund, and either reinvest the quarterly dividend or send the dividend to other parts of your EF.
I wouldn't go much more risky than those for an EF.