I wanted to get some of your thoughts from the group regarding a good place to stash an emergency fund. I have about a year's worth of living expenses (~$20K) sitting in a high yield online savings account with Ally Bank making 1% in interest a year. As it stands now, I would be paying for that 1% gain at my marginal tax rate of 28%. It just feels wasteful having that much money sitting around earning below inflation. I already maxed out my 401k and roth IRA contributions.
Would it be better (in terms of growth and tax-efficiency) to invest some of that money in a dividend ETF like SDIV where the annual dividend yield is 7% paid monthly and paying for that 7% at the capital gains rate of 15%? If not, would a tax-exempt municipal bond fund (VTEB) be a wiser option? I was thinking about doing a tiered approach leaving $10K in the Ally account for liquidity purposes and routing the other $10K to a dividend ETF where it can have higher tax-efficient growth potential and using the gains for my housing fund. Would/does an approach like this make sense?
I'm not really well-versed financially and would appreciate any thoughts you all may have. Thanks!
Would it be better (in terms of growth and tax-efficiency) to invest some of that money in a dividend ETF like SDIV where the annual dividend yield is 7% paid monthly and paying for that 7% at the capital gains rate of 15%? If not, would a tax-exempt municipal bond fund (VTEB) be a wiser option? I was thinking about doing a tiered approach leaving $10K in the Ally account for liquidity purposes and routing the other $10K to a dividend ETF where it can have higher tax-efficient growth potential and using the gains for my housing fund. Would/does an approach like this make sense?
I'm not really well-versed financially and would appreciate any thoughts you all may have. Thanks!
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