There are many things which happen without any kind of expectations. What if you suddenly hear a clinking noise from your car brakes? What if there is suddenly a busted water heater? This is the exact reason why financial experts recommend you building an emergency fund. An emergency fund can safeguard you and your family unanticipated expenditures which could lead to monetary hardship in case you’re not ready for it. Now the million dollar question is where you should keep your emergency fund and whether or not you should separate it from savings and checking account.
What does a financial emergency mean? It includes hefty medical bills, job loss, home repair or a sudden pay cut or any other financial setback which could push you to seek help of Lendgreen emergency money. If any such sad situations take place, the emergency fund can offer a financial cushion and months of support when you get back your finances.
Home for your emergency fund – Knowing your options
While deciding where you should keep your emergency fund, here are few of the different accounts where you can store your funds:
- Bank accounts (high-yield)
If you choose to save your emergency fund in a high-yield savings account, this will probably be your best go-to place. Your funds will not just be accessible in such a bank account but you can even earn interest on the deposits that you make. If you’re looking forward to finding the best high-yield savings account for yourself, make sure you choose one which has got a competitive rate and without any monthly balance or fee requirements. If you get welcome bonuses for the rookie customers, you will grab an advanced benefit.
- Certificates of Deposit (CD)
CDs or Certificates of Deposit offer a fixed return rate for a definite time period; for instance 1.35% APY for a period of 24 months. As there is a guarantee of the rate of return, opening a CD would definitely be one of the best ways of making added interest on the emergency fund. As CDs usually tie up funds and once you invest here, they become out of reach, you will require paying a penalty if you want to get access to the funds before time. You can fight this by opening several CDs with different dates for maturity.
- Money market accounts
When you decide where to invest your emergency fund, make sure you don’t forget money market accounts. They are almost similar to savings accounts as they offer higher yields. You’re allowed to open such an account either at a local bank or online and then access it through an ATM or a web-based account management. Money market accounts can be used easily and you can withdraw funds at any time. Nevertheless, be careful about the money market fees which could at times chip off your returns.
Therefore, now that you know where you should keep your emergency fund in order to make the most out of it, what are you waiting for? Speak to your financial advisor and take an immediate decision regarding the money that you have saved.