ADVERTISEMENT

Protect Your Cash—In a Bond Fund Comments

  • By DailyWorth Team
  • July 26, 2012

You've got the emergency cash stash, in case disaster strikes—good for you.

 
Now let’s talk about how depressing it is to watch all that cash just sitting there in an account, earning less than the rate of inflation.
 
Consider investing part of your savings in a short-term bond fund, like Vanguard’s (VBISX), or Fidelity's intermediate bond fund FGNMX.
 
While not as secure as an FDIC-backed bank account, a conservative collection of bonds could earn you 2-3% more per year than most savings accounts, says personal finance expert Galia Gichon.
 
“I'm a fan of moderation,” says Gichon. “If you have at least three months’ of expenses saved as cash, you can start saving in a bond mutual fund after that—as long as you keep saving toward six months’ total.”
 
You need the cash account for liquidity (i.e. instant access), but the bond fund gives you some growth. 
 

Out of the Box
Credit unions, USAA, and online banks offer the best rates on standard savings accounts. Shop around for the best rate by calling up your credit union or hitting up Bankrate.com.

 
Earn, baby, earn. Where do you park your emergency dollars?
Tagged in: Saving
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT

© Copyright DailyWorth 2014