Where to put new Rainy Day money when the Fed Funds rate is 0%?

[Nutria]

At the beginning of next month, I'll have more money to put in my RDF. Both Savings and 12 month CD rates at Ally are 1.5% at the time of this writing. Should I lock it into a 12 month CD, or a Raise Your Rate 2 year CD (currently also 1.5%) or -- which I'm also considering -- even leave it in cash and "buy low" in the market?

[disneysteve]

I don't think your EF should be in the market. I think that's money that should be liquid and safe. It's not about high earnings. 1.5% isn't much but it's something.

Any chance you'll have the money before 3/31? Ally is currently doing a promotion and paying a 1% bonus on money you deposit by then and leave in for a couple of months.

[Nutria]

I don't think your EF should be in the market. I think that's money that should be liquid and safe.

That's dogma, and useful as far as it goes. But I've already got 8 months of expenses locked in 12 month CDs. This is "just" money to round it off to an even 12 months.

Any chance you'll have the money before 3/31? Ally is currently doing a promotion and paying a 1% bonus on money you deposit by then and leave in for a couple of months.[/QUOTE]

It's already in an Ally savings account. The plan I'm implementing is to open enough CDs every month from that savings account to have a roughly equal amount renew every month.

[sblatner]

I don't think your EF should be in the market. I think that's money that should be liquid and safe. It's not about high earnings. 1.5% isn't much but it's something.

Any chance you'll have the money before 3/31? Ally is currently doing a promotion and paying a 1% bonus on money you deposit by then and leave in for a couple of months.

Thanks DisneySteve!

[disneysteve]

But I've already got 8 months of expenses locked in 12 month CDs. This is "just" money to round it off to an even 12 months.

It's already in an Ally savings account. The plan I'm implementing is to open enough CDs every month from that savings account to have a roughly equal amount renew every month.

Oh. In that case, you could do a couple of different things. You could go for a little longer CD like 18 or 24 months just to boost your return a bit. Or if you are willing to take some risk, you could invest it. Where would depend on how much risk you want. You could go all in with 100% of it in a total stock market index or be more conservative with a good balanced fund, like 60/40. It's just a matter of how secure you want that money.