[USER]

Looking to get some education on the topic as I am newbie.
I want to land my emergency fund ($10K) in an account that put the money to work while I can have access to it if I need to.

I’ve learned about HYSA and Mutual Funds.
Please educate me further as which one to choose or if there a better option.

Thanks!

[Beverly]

HYSA is a solid option since it’s FDIC insured and won’t decrease in value. I had mine at UFBdirect for over a year.

But personally I’m moving my emergency fund to Fidelity’s cash management account and choosing SPAXX, to consolidate my accounts.

It’s not FDIC-insured but the yield is similar and speed/ease of access is much better. Fingers crossed I don’t regret this

[Christopher]

“Mutual funds” is like saying “teach me about cells”. There are zillions of kinds.

There are money market funds (these are like HYSA), risky stock funds, and blends between the two.

Tax treatment varies depending on what is held and how long.
HYSA is simpler – it’s cash.

[Amy]

Your priority for an emergency fund should be protection of the principal. Think of your EF like an insurance policy.

That money has a different job to do than maximizing growth.

The market is volatile. If you invest your EF you risk the balance dropping right when you might need the money.

A money market fund at your brokerage or a HYSA are safer options.

[Mark]

2 completely different purposes. EF isn’t there to work for u. It’s for insurance. Investments work for u. Investments = mutual funds.

EF = HYSA or mmf.

[Author]

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