T-bills
For those of you looking for a safe, short-term, yet decent returns, you may want to consider T-bills. T-bills are what the US government uses to finance its operations by issuing them periodically (along with T-notes and T-bonds). T-bills are issued for 4-, 13-, 26- and 52-weeks.
Yields quoted at Treasury Direct for 4-, 13-, and 26-week T-bills are 1.84%, 1.94% and 2.13% respectively which are roughly in the ball-park of high yield savings accounts in various banks (listed below).
T-bills (and, for that matter, T-notes and T-bonds) are considered safe (as safe as the guarantee of the US Government). But they are subject to interest rate risk - that is, interest rates may rise as you hold the them driving down the market price of the T-bill.
Here's a great primer on bonds, in general, that will give you the basics. So read carefully before diving in.
You can buy/sell them at your brokerage (look under 'Fixed Income' or 'Bonds' or something similar). You can also buy them directly from the Treasury Department of the US Government.
High Yield Savings Accounts
By comparison, there are high-yield savings accounts at various banks that also offer decent interest rates (with the obvious advantage that you do not need to worry about interest rate fluctuations and such) - a few are listed below (Disclosure: My company and I have no affiliation whatsoever with any of them - no ad money, no affiliate clicks, etc. etc.):
- Ally Bank: 1.65% annual interest
- Marcus (Goldman Sachs): 1.8% annual interest
- Capital One 360: 1.6% (min. $10,000).
- Synchrony Bank: 1.75%
- American Express: 1.75%
- CIT Bank: 1.55%
As always, check the details that matter:
- Are there minimum balances that you have to maintain?
- What fees do the banks hit you with?
- How easy is it to close your account? All make it easy to open an account but some make it really hard to close an account. So check this upfront.
Where should you hold emergency cash?
Emergency cash should be accessible immediately to meet your emergency needs - you should be able to access it with your debit card and/or write checks against it should the need arise. So keep these funds in an account that meets these needs. Many high yield savings accounts limit the number of withdrawals you can do per month, for example. So before keeping your emergency funds in one of these accounts, read the fine print carefully!
Good luck!
Submitted June 25, 2018 at 02:30PM by arnexa https://ift.tt/2yCGWlY
