Where Do You keep Your Short-Term Cash?

Here's a reminder from Bankrate that you should keep any money you'll need in the next couple of years in a very liquid account like a money market. The details:

I'm with you and agree that you should be investing conservatively when you have an investment horizon of two years or less. CDs, money market accounts (MMAs) and money market mutual funds (MMMFs) are all good choices. CDs typically aren't as liquid as the other choices with penalties for early withdrawal.

We keep our short-term money in a Vanguard money market. It earns competitive rates and makes it easy to buy Vanguard funds if I decide I want to move some money from short-term savings to long-term investments.

How do you manage your short-term cash? Where do you keep it?

Comments

[Scott Kustes]

E-Trade 5.05% savings account. It's very liquid and earning a pretty good rate. What does your Vanguard money market earn? I have a Vanguard IRA and might look to move some money if it's a better rate.

[Bronco]

I keep most of the cash in laddered treasuries (1-6 months) via Treasury Direct, and a bit for immediate needs at ING and HSBC.

[bettis]

i am in ING. fair rate and good access, especially since i also have an ING checking account.

[Tim]

for my crack habit, where my money needs to be very, very liquid, I keep it in my hollowed out bed post.

for other liquid cash, i keep it in igobanking at 5.3% APY

i keep semi liquid cash in a MMA, but very small amount and only because sometimes i get an aching to buy some stocks. but since the mma doesn't earn as much as igobanking, don't see the real reason to keep much in it. not to mention that you need to wait a few days before availability upon deposit.

i keep other semi-liquid cash in laddered cd's only b/c i have a min requirement for my principle bank account; however, once they mature, i'm going to cash out and move somewhere else. the initial two years where i got some bonuses for the cd's was worth it, but not anymore. i'll do better putting it elsewhere.

ING Direct. It only pays 4.5% which is lower than other options, but I've shopped around and ING has absolutly NO FEES. Others have fees for min balance, wire fees, etc etc etc. Those fees can eat up your savings real quick.

[kurt]

Vanguard. No fees that I've ever encountered (maybe there's one? Don't know). Better rates than anything out there (after adjusting for taxes).

[Jake]

Your short-term cash needs should be small (i.e. thousands, not tens of thousands), and are likely to be somewhat unpredictable. Thus, your % return is somewhat less important than normal, and liquidity is maximally important.

I use ING Direct because it is liquid, I have been there without a single problem since 2000, and the interest rate differential between it and a money market fund (etc) is not enough for me to justify decreasing my liquidity to chase it. If I went to a 1-year CD and gained like half a percentage point of returns, it would make me much less than $100, so why should I risk being without money when I really, really need it? For a couple of $20 bills? You gotta be kidding me.

I'll stick with ING, but ETrade and Emigrant are also good.

[fcc]

I also keep my short-term cash in a Money Market with GMAC. I like GMAC because they tend to keep their rates very competitive and the support is usually pretty helpful too.

[Scott]

ING Direct savings account and CD ladder (also through ING). Been with ING for 5 years this month and love it. No fees, no hassle, good returns.

[JGInvest26]

I go with ING Direct (4.5% currently) and HSBC Direct (5.05% currently). ING Direct is tough to beat in ease of use. I love how you can setup several different accounts in a flash. It makes it very simple when you're saving for different things (Christmas gifts, vacations,etc.) HSBC isn't as user-friendly but it consistently has one of the highest rates. Although, I tend to agree with Jake: If you only have a few thousand dollars in the accounts a few basis points isn't going to change your life.

[Tim]

i'm surprised at the rationale people use for maintaining ING accounts at 4.5%. It sounds like laziness out of inconvenience (less than 5 minutes to setup on line) to set up a new account rather than what is the best deal. the interest adds up over time. dismissing $20 bill here and there is a bad attitude to have. Especially if you are looking at other ways to cut costs $1 here and a $1 there. the justification doesn't make sense.

i haven't found any to be easier than others to use, but i admit i don't know what "easy" means to people. i have and had ING, HSBC, citi, bank of america, igobanking, wachovia, and usaa accounts. i finally closed ING (4.5%) b/c of the large .8%APY difference between them and igobanking (5.3%). I had kept ING opened, but didn't find the use anymore in doing so. i opened for the sign up bonus, but once i capped out on my ability to get it, it was no use maintaining it. i have other accounts still opened b/c of promos, but will close in a month or two after the 6 month waiting period ends.

[Jon]

Online High Yield Savings Account

[Teri]

GMAC MM - 5.3% APR.

CD with local credit union - 5.7% APR.

CD with CalFirst - 5.5% APR.

I always shop around bankrate, but got a good promo rate on a CD with my credit union recently.

For now with little difference between CDs and MM rates I would probably stick mostly with a bank money market, but this promo rate came up right when we did a balance transfer (to earn interest) so I jumped on it.

When interest rates get more varied I tend to ladder CDs.

[Teri]

P.S. I don't pay any fees. GMAC customer service is excellent. (Yeah I have to keep $500 in here or something but big deal).

[Trey]

I am actually in the process of opening an account at Emigrant. I had never heard of igobanking. What is the deal? Should I switch? What are the fees? Thanks!

[Rob]

Emigrant and in the process of setting up an ING checking account.

[Dr. Artfredo C. Abella-Philippines/U.S.A]

When you talk of short term cash it means you want to keep your money for short duration of period or time. The best way is to invest it in Time Deposits for monthly expiration period. It will earn small percentage of earnings and the once the one month period expires you can encash it. The other way is to invest it stocks during bear periods when it becomes bullish you can sell it at a marginal profits. You can also keep it in savings deposit, however most banks provide interest earnings on a quarterly basis so you have to wait for a three month period before you can earn an interest earnings. You can also engage in discounting of notes or checks. You encash post dated checks at discounted rates once the payee pays the principal amount you earn.