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Comment by timr | Hacker News Reader

"I'm partial to keeping 3 months of expenses in cash and another 9 months in highly liquid, low volatility securities."

I'm curious...what highly liquid, low volatility securities are you in right now? The best I've been able to do is a high-yield online savings account, but I'd love to know if there's something better.

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I put this question to my advisor two weeks ago, and his point was that right now, if you're talking about something that you reasonably fear will be short-term (which is the entire point of emergency funds), there's nothing better enough than a saving account right now to make it worthwhile. Getting even 2% vs. .5% for two or three years just isn't that significant on a couple tens of thousands of dollars, the difference is swamped by future uncertainties either way. Either way you're pretty much going to be able to take out what you put in.

I use a CD ladder for this purpose. Twelve one year CDs, each maturing on different months, set to automatically reinvest unless we decide otherwise. Works well for the people who need to have their emergency money a bit harder to get too, too. We just like getting slightly higher interest.

I'm partial to treasurydirect's t-bills program. No fees (except if you sell early) and short maturity.

If you're under the FDIC insurance limit, I've generally found savings accounts to pay more for the same safety. For example, ING Direct currently pays 1.10%, versus 0.15% for the 1-mo and 3-mo t-bills.

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