Question

Cindy has been working for 8 years, and she’s built up a huge emergency fund --...

Cindy has been working for 8 years, and she’s built up a huge emergency fund -- $45,000, which would be 6 months of her salary. She’s hoping to earn a bit more interest than she currently is with that $45,000 just sitting in her traditional bank’s savings account. Which account would you recommend? Why?

Homework Answers

Answer #1

It can be mentioned that CDs, FDs all give a better return than savings account and because this is an emergency fund the above mentioned alternatives will not suffice the need.

That is the reason why it is always better in order to invest in an account where there's always an option of withdrawal. If you're a bit risk seeking person, it is better to invest in mutual funds, which will give you a bit high return than savings over the course of time. However, when you consider less risk, high yield checking account is indeed a better option which doesn't offer significantly higher rate than interest but offers a good rate.

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