Elistan

I current have the equivalent of about half my salary sitting in a savings account. The interest rate started around 5% when I opened it but is now down near 2%.

What would you do with such money? (Assume you do not have access to any other liquid funds. Everything else is in a 401(k) or IRA or similar.)

What would you recommend for somebody in my situation, as below?
- All my expenses come out of it (mortgage, food, race tires, etc.)
- I don't expect my job to change anytime soon, but a layoff is always a possibility. Therefore aving immediate access to the funds in an emergency is important.
- I have no desire to manage it on a day-to-day basis. I want to fire-and-forget, so to say.
- I'm very averse to risk.

So far the best I can come up with is something like put half of it into a one-year CD with about 4% APY, rinse and repeat. Anybody think of a plan that's better but satisfies my desire for safety and access?

trainwreck

bond etf?

Chris S

How about a money market fund? Yields s/b higher, and they're low risk investments (albeit not as safe as a bank account).

ETrade and Ing Savings accounts also have pretty good yields (~3.3% last I checked).

Chris S

bonds are subject to interest rate and default risk.

[gTr]

What about Munis (relatively safe and no Federal or State tax).
Also given the possibility of inflation another security you can look into is TIPS.

Don't forget at present there is no great return in anything safe as thats what everyone is flocking to.

SD_S2K

put 6 months living expenses in a high yield savings, I have mine in etrade at 3.30 apy

put the rest in laddered CD's over 6 mos, 1 yr, 2 yr, etc that are getting 4.5+ right now

no reason to have tens of thousands of cash in a checking account, wasting money

aklucsarits

Best current CD rates:
http://www.fatwallet.com/forums/finance/682884/

Best current FDIC insured money market/Savings accounts:
http://www.fatwallet.com/forums/finance/783099/

If you are looking at keeping it in there for less than 1 year, do a moneymarket/savings account and keep it 100% liquid. Short term CD rates are not attractive now. CDs of 1 yr or longer are not really paying much better. But WaMu is yielding 5% on only a 1 yr CD, which is pretty much the best thing going right now as far as CDs go.

Andrew

cthree

What you have is about as good as it gets. You want the cash liquid which rules out CDs. I'd keep it in one or more FDIC insured money market high yield savings accounts (I don't know how much $ you make).

QUIKAG

I get about 3.5% in a NCUA insured money market fund with my credit union. That is good enough for me. Mark, find a credit union because banks typically suck compared to good credit unions.

Elistan

You have USAA don't you? You find credit unions do better than them even? I was a member of Community CU until they became a bank - never noticed their rates and features being all that better than my USAA stuff.