So, my wife and I do a pretty good job of budgeting and saving for things, which means we have a lot of cash laying around. Between a $15k emergency fund, savings for car replacement and repairs, appliance replacement and repairs, vacations, etc., we currently have north of $35k just sitting in the bank. We've moved a lot of it into a money market savings account, which is at least generating a 1% return (far better than the .07% or whatever on the checking account).

Unfortunately, this feels a bit like throwing money away. If inflation is above 1% (and, thankfully, it's been low lately), we'd be losing hundreds a year.

Are there higher return places to put all that excess cash, while still keeping it pretty liquid? I've used I bonds in the past for this purpose, where you at least get the security of knowing your money will keep pace with inflation.

Is there a better alternative than an I bond to earn a higher return and still remain liquid without a significant increase in risk?

  • 2
    What is your risk appetite ? That might lead to dedicated answers. What timeframe are you looking at ?
    – DumbCoder
    Commented May 27, 2015 at 13:43
  • 1
    As I said, I want to keep this pretty liquid. The ideal timeframe is permanently for a lot of it (we'd obviously prefer to never spend the emergency fund). As for risk appetite, very little to no risk. We're already investing aggressively, so this is more about the best thing to do with excess cash that we may need to access at any moment (car wreck, lost job, etc.). Commented May 27, 2015 at 13:46
  • Reasons for downvoting? Commented May 27, 2015 at 14:28
  • 1
    I think the down votes are for the close reason "Primarily opinion based". I attempted to edit the end of the question to drive for a less opinion based answer (What to do with cash?) and a more factual answer (What's a higher return for similar risk profile?)
    – Alex B
    Commented May 27, 2015 at 15:32
  • 4
    There are many existing questions about this. Here and here and here and here are some. Bottom line is that attempting to earn good returns is incompatible with the goals of an emergency fund (maximum liquidity and minimum risk).
    – BrenBarn
    Commented May 27, 2015 at 16:53


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