Savings account for emergency found

[Andrew]

Where would you open savings account to keep emergency found?

I have  Chase savings account with 0.000000001% interest. Of course I am exaggerating

[DMFA]

Common ways to do it:

1. Your local bank, like where you have your checking: immediately available for true emergencies, but you hardly earn jack for interest.

2. An online savings account like Ally Bank. You earn 1%, which isn't much, and it's not available at the snap of a finger (1-3 days, I think?), but it's better than zero.

3. A taxable brokerage account, like at Vanguard, Fidelity, Schwab, etc, invested highly (50% or more) in municipal bonds. This is the riskiest and least liquid of the three, but gives you some ability to earn.

I like to mix 1 and 3, with about $15,000 at my fingertips and the rest in a taxable. Many here are content to earn 1% from Ally Bank, also fine.

You just have to make sure you can cover true right-now emergencies (checking acct, CCs), short-term expenses if you lose income (have 3-6 months' worth), and don't leave it exposed to too much (or any) equity risk.

[Miss Bonnie MD]

Metropolitan Bank 2% checking up to 25K, for MDs only (I don't use it but a lot of others do)

[AK2TX]

What about a betterment "Emergency Fund account" with the following investments?

Overall 60% Bonds, 40% Stock

US Total Stock Market: VTI 8.3%

US Large-Cap Value: VTV 8.3%

US Mid-Cap Value: VOE 2.7%

US Small-Cap Value: VBR 2.3%

Developed Markets: VEA 15.2%

Emerging Markets: VWO 3.2%

Inflation-Protected Bonds: VTIP 6.2%

Short-Term Treasuries: SHV 1.2%

Municipal Bonds: MUB 32.4%

US Corporate Bonds: LQD 3.1%

International Bonds: BNDX 11.3%

Emerging Markets Bonds: EMB 5.8%

Fund Fees per year 0.16%

This is a question, not a statement. Thanks WCI Heads!

[WallStreetPhysician]

Andrew wrote:

Where would you open savings account to keep emergency found?

I have  Chase savings account with 0.000000001% interest. Of course I am exaggerating

Click to expand...

I would consider a place where you can get a nice sign-up bonus and have zero fees. Potentially, the bonus is several years worth of (CD-rates) interest.

[DMFA]

AK2TX wrote:

What about a betterment “Emergency Fund account” with the following investments?

Overall 60% Bonds, 40% Stock

• US Total Stock Market: VTI 8.3%


• US Large-Cap Value: VTV 8.3%


• US Mid-Cap Value: VOE 2.7%


• US Small-Cap Value: VBR 2.3%


• Developed Markets: VEA 15.2%


• Emerging Markets: VWO 3.2%

• Inflation-Protected Bonds: VTIP 6.2%


• Short-Term Treasuries: SHV 1.2%


• Municipal Bonds: MUB 32.4%


• US Corporate Bonds: LQD 3.1%


• International Bonds: BNDX 11.3%


• Emerging Markets Bonds: EMB 5.8%

Fund Fees per year 0.16%

This is a question, not a statement. Thanks WCI Heads!

Click to expand...

Are you really benefiting from all the complexity?  Though the value tilt prob def helped you in the past year.  5:1 VEA/VWO vs just doing VXUS (which basically has that ratio built-in)?  How big is this fund, and how much will having 1.2% in something really matter?

Also, many of those bonds are tax-inefficient, save for the munis.

I mean, if Betterment is doing it for you with its robo-advisor and it's hands-off, sure, complexity isn't really an issue.

[AK2TX]

Betterment manages it for me. I am about to start residency and just thought it better to focus on medical education and do a little of CFE as I plug along, but getting more return for idle money seemed like a good idea as well. I do have a savings account with Ally bank at 1.0%, but Betterment offered this "Emergency Fund" plan and I am starting the fund with $10,000 and plan to just leave for an emergency should one come up in residency.

[Zaphod]

AK2TX wrote:

What about a betterment “Emergency Fund account” with the following investments?

Overall 60% Bonds, 40% Stock

US Total Stock Market: VTI 8.3%

US Large-Cap Value: VTV 8.3%

US Mid-Cap Value: VOE 2.7%

US Small-Cap Value: VBR 2.3%

Developed Markets: VEA 15.2%

Emerging Markets: VWO 3.2%

Inflation-Protected Bonds: VTIP 6.2%

Short-Term Treasuries: SHV 1.2%

Municipal Bonds: MUB 32.4%

US Corporate Bonds: LQD 3.1%

International Bonds: BNDX 11.3%

Emerging Markets Bonds: EMB 5.8%

Fund Fees per year 0.16%

This is a question, not a statement. Thanks WCI Heads!

Click to expand...

Thats pretty complicated. Cant you just do a total martket US, exUS, and muni bond fund? Or even just a very diversified stock/muni mix. I try to stay away from divs in taxable.

 

[airborne1]

Just posted this exactly on another forum: Metropolitan Bank is FDIC insured and is a great checking account. Just contact Holly Bronson by email [email protected] or phone office 901-969-1860, mobile 901-568-8448 and she will set it up for you. There are a few banks listed on physician moms with higher interest rates but all require hoops to jump through. We have our emergency fund here and is accessible via debit card anytime (they refund ATM fees from other banks). No minimum requirement. Above 25k, the 2% goes down to 0.5% I believe. So, I place all our extra savings in Ally online account (1%). Is a little annoying to have mutiple accounts, but when I just saw $61 in interest recently, was more then I've ever gotten from a checking account. I had warned her a few weeks ago she might get a lot of calls from this group! Highly recommend this account. No hidden monthly fees or activity or balance requirements. Easy to link to my work account and transfer balances online between banks. P.S. Wife just told me Holly is out this week according to PMG post so might be some delay in hearing back from her.

[adventure]

Barclay's US online. 1%.

edit 7/30/17- they raised it to 1.2%!

[Andrew]

I see a lot of you guys are not keeping emergency found in cache.

Not sure If I would put all founds in bonds/stocks portfolio but having solid 3- months in cache and another 3 months in stocks is something appealing to me. I will consider Ally Bank and taxable account. My primary bank gives my nothing so I don't see why I should sponsor them.

With proper planning, modest life style, good disability insurance, credit card( as a back up), working spouse( physician) I personally believe some can be more aggressive in terms of investing  emergency founds.

It always amazes me how some of my colleagues who are in high pay specialties( much better than mine)  are living paycheck to paycheck and complain how poor they are( different topic).  Sure they may have nice Porsche and belter house but I just laugh at some of them, especially those who are in late 60's and are still working "resident" hours not because they enjoy it but they have too. Always grumpy and angry.

[s109442]

capitalone360.com money market account is offering s $200 dollar bonus for opening account. Has a 10k min

[SwanSong]

If you're into rate-chasing, there is a new online bank, PurePoint Financial, that now has rates of 1.25% if your monthly balance is over $10,000.   I have been okay with Ally to this point, but I suppose if we hold off on buying a home that I may move the downpayment/emergency fund in with them.

[StarTrekDoc]

If you have a home -- HELOC.  Easy is writing a check for emergency and readily available as other account for fast access at the local bank with the HELOC/Mortgage.  Keep the real 'emergency funds' at 3 day backup notice in bond fund.

Our case:

BOA - mortgage+ HELOC (not used) + 100k ML fund  = preferred customer with built in emergency and transfer funds between Mortgage/HELOC/ML (Muni CA bond fund).   Accessed 15k on heloc sameday cash from HELOC for pool last year sin issue.

 

 

[VagabondMD]

I use a variety of instruments for my emergency fund. Savings accounts (Ally and CapitalOne 360), Money Market accounts (Ally, Fidelity, Vanguard), CDs (Ally and local bank), and checking accounts (CapitalOne 360 and local bank). There are good options in all of these categories.