I don't know this particular place, but I have my emergency fund in a vanguard money market (Vusxx), and it is super safe and returning over 5%. It takes about 24hrs to settle any sells, so I have fairly quick access to my cash
Money market is the way to go. You are exposed directly to the federal bonds, which are basically what most banks use to back their high interest accounts, so you will get the the highest rate possible with no middle man. Money market funds are not FDIC insured, but the Vanguard fund (VMFXX) has never "broken the buck" or lost value since its inception in 1981.
Money Market Funds are SIPC-insured, which is largely the same as FDIC insurance, except you need to make a claim for SIPC protection whereas FDIC is automatic.
The main other difference as you mentioned is that they're not guaranteed to have any particular return, and they could go negative by breaking the buck, but that has happened exactly twice ever and after the second time, we got new regulations to further reduce risk. Current MM funds are probably more secure than traditional banking, at least in terms of how likely you are to have to deal with the insurance (i.e. a money market fund failing is very rare, and MMFs are often owned by investors instead of a bank or brokerage).
I put my entire emergency fund in wealthfront. It was just sitting in a savings making nothing otherwise.
I really like Wealthfront's automated savings, and their website is top notch. Very easy to use and navigate.
I've been using it for a year now and already signed up 3 people. Been nabbing that extra % when I can.
I have my savings in a high yield savings account (FDIC insured) and a checking account at the same bank, so I can access the money pretty much instantly if needed. I don't use Wealthfront specifically but I've heard good things about them. Once you earn more than $10 in interest you do have to pay taxes on it.
Sure, why not? Here's how my emergency fund is set up:
With ibond rates going down, I'm laddering into t-bills, with the ultimate goal being some bonds maturing every 2 weeks.
I currently also use my brokerage account as my bank account, which is invested in SPAXX (4.91% 7-day average APY). It provides an awesome debit card (no foreign transaction fees, ATM fee reimbursement worldwide, etc), earlier access to my money vs other accounts (e.g. I get paid on Friday, money is there on Thursday), and I've had no issues with it for the year or so I've used it this way. My t-bills live next to my savings "slush" in the same account, so it's quite nice. Here's my actual setup:
This is a great breakdown! Thanks for taking the time to share. You’ve given me a lot to think about and I’m glad this can work.
It's just a bank account at the end of the day, and it's FDIC-insured, so why not?
I'm using SoFi right now (4.5%), but I'd switch to Wealthfront in a heartbeat if they had joint account support. They're always very fast to raise the rate when the fed announces a rate hike, and they seem generally pleasant to use from what my coworkers say.
SoFi has 4.50% Apy on a checking/savings account. Not too shabby for FDIC insured.
Learn about budgeting, saving, getting out of debt, credit, investing, and retirement planning. Join our community, read the PF Wiki, and get on top of your finances!
Note: This community is not region centric, so if you are posting anything specific to a certain region, kindly specify that in the title (something like [USA], [EU], [AUS] etc.)