I like this idea- put $1000 into a CD each month and leave $3000 in a
money market or regular savings account. Have the CDs mature every 12
months.

Elle wrote:
- quote -


I would put a small amount of my cash reserves in ETD's to goose the
overall yield a little. I guess I haven't seen the prices fluctuate all
that much, but I haven't been watching them for all that long. FCZ has
been a nice anchor in my Roth IRA to balance some of my riskier
holdings. I paid 23.5 for it, and might should have sold it when it
recently got up around 27. Now it's back around 25.5. Overall, maybe
I've just been lucky with it; the interest payments come right on time
every 3 months.

I wouldn't recommend putting all of one's emergency funds in US savings
bonds because they are not redeemable for 6 months. With my luck, I
would lose my job a couple of weeks after converting all my cash into
bonds and then be hurting for 5 months or so. But they sure woulda been
a lot better place to put DD's college savings account that I opened 12
years ago instead of that Fidelity blue-chip growth fund I bought into.

Bob


======================================= MODERATOR'S COMMENT:
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"zxcvbob" <zxcvbob[at]charter.net> wrote
snip
- quote -

You sure you feel good about recommending these for emergency cash, Bob?

ETDS's and other hybrids crashed last May, for example, to the tune of over
10%. Also, Ford's FCZ is barely investment grade. It's a lot more risky
than a CD, money market, or U.S. savings bond.

I have some ETDS and other hybrid positions, but they are not for emergency
cash, because (1) their market price will fluctuate and sometimes a lot;
(2) they're not all AAA rated; (3) ratings may change; (4) they're
callable, which means I have to keep an eye on them over the years; (5) the
issuing company doesn't always have to pay dividends at the specified
times.

I can understand maybe having some positions like this in one's IRA,
though. I'd still babysit them, since interest rates are at near-record
lows and are, I would say, going up. These hybrids can end up locking in a
rate that is low, by historical standards, for some 30 years.

I would calculate what your monthly expenses are and then create a ladder or
series of CD's that mature each month. Put some reserve in a ING Orange
account, or something similar.

With the balance start taking putting to use in a savings method that will
be ready for your next life event.

How are your retirement plans looking?

"charlie" <globalview[at]excite.com> wrote in message
news:1109987074.976211.278110[at]l41g2000cwc.googlegroups.com...
- quote -

charlie wrote:
- quote -


Since interest rates are rising right now, I've got my emergency funds
in a 3 month CD at 2.42%. It should renew next week closer to 3%. The
rate when I bought it was almost the same as a 6 month CD. If I were
you, I think I might get three 3 month CD's and stagger them so one is
maturing every month. Most any emergency can be paid for a month later,
and if it's really a SHTF situation and you can't delay payment for a
month, paying a 3 month penalty for early withdrawl is probably the
least of your troubles.

If you want higher returns on part of the money, you might look at
buying some investment-grade "exchange traded debt securities" at your
favorite discount broker. I have some Ford Motor Credit notes in my IRA
(ticker is FCZ) that are paying 7 3/8 percent, and I can sell them at
any time with just a $7 brokerage commission.

Best regards,
Bob

charlie wrote:
- quote -

Thanks for the responses everyone. I'm going to consider consolidating
my $15,000 so I don't have to wait a full 90 days to have access to all
of it. I wonder how long the 3% rate will last at EmigrantDirect? Is
this maybe an intorductory rate?

In article <1109987074.976211.278110[at]l41g2000cwc.googlegroups.com> ,
"charlie" <globalview[at]excite.com> wrote:

- quote -

If this is an "emergency fund", then you are going to have to
get pretty good at scheduling your emergencies. By their
very nature, an emergency can pop up at any time. You should
have access to at least some of the money right away without
waiting 90 days.

- quote -

Some folks invest all of the emergency money, then use home
equity line of credit or credit cards to pay for the emergency.
Then, when the time is right, pull the money out of the
investment to cover the short term loan. The idea is that
unless you are very wealthy, you have to have your money
working as hard as it can. You then do everything you can
to minimize those emergencies.

-john-

--
================================================== ====================
John A. Weeks III 952-432-2708 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
================================================== ====================

Consider moving $5000 (or less) every year for the next several years into
U.S. savings bonds, EE or I. They cannot be redeemed at all the first year.
But after this, you can redeem them anytime. Redemption before five years
incurs a three-month interest penalty, but that's trivial if one's
alternative is a money market fund or maybe 6-month CD, or if one buys at
the end of a month (which still earns the full month's interest) and
redeemss at the beginning of the month (again, still earning the full
month's interest.) Note also that U.S. savings bond interest is exempt from
state taxes. Currently EE bonds are yielding 3.25%; I bonds, 3.67%.

"charlie" <globalview[at]excite.com> wrote
- quote -

The reason to put cash in a CD as opposed to a money market account is
to get more interest, so one would need to know the yields on the MMA
and CD's to advise you, as well as what the prepayment penalties on the
CD's are.

There are savings accounts from Emigrant Direct (currently offering a
3% yield), ING Direct, and other banks offering relatively high
interest rates and liquidity. You can find them online. To make things
simple, you might consolidate all your emergency money in such an
account.

I have $15,000 as my emergency cash reserve. Where do I stash it?

Money Market account $5,000 (available anytime)
6 month CD #1 for $5,000
6 month CD #2 for $5,000

The 6 month cd's would be staggered so one is always maturing every
three months.

Is this plan any good? How can I get better return (bonds?) but still
allow access to $5,000 every three months?