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I currently have a Vanguard account (Mutual Fund) with about $10,000 in it (more now). I have a savings account with about $7,000 which I consider my "rainy day" fund and I try to put money into my savings monthly (last couple of months, I've had to buy stuff for the house so it should be $11,000 but had to drop some serious cash).

Anyways, I want to close my savings account and move my money and get better yields. My brother in law suggested that I put my money in my Vanguard mutual fund. I also began looking into money market accounts. Since my savings is my rainy day fund, here are some requirements:

  1. Liquidity: I need liquidity because it's my rainy day fund.
  2. Interest: It doesn't have to be super high but it'd be nice if it yielded more than 0.05% or whatever it is my bank gives me.
  3. Secure: FDIC backed is a HUGE plus.

Any advice? Would I be better off switching to a money market account? Would a mutual fund do exactly the same thing as a money market or savings accounts? Thoughts and advice are welcomed!

dg99
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curiousdork
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1 Answers1

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Liquid cash (emergency, rainy day fund) should be safe from a loss in value. Mutual funds don't give you this, especially stock funds. You can find "high yield" savings accounts that are now at around .8% to .9% APY which is much better than .05% and will hopefully go up. Barclays US and American Express are two big banks that normally have the highest rates.

Most/all Savings and Money Market accounts should be FDIC insured. Mutual funds are not, though the investment IRA, etc. holding them may be.

AbraCadaver
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