Alternative For Your eFund
Earlier in the year, I finally took the plunge and moved my emergency fund from ING over to a new account at HSBCdirect. The motivating factor for that switch was the 6.00% APY promotion that HSBC is running until the end of April.
As the end of April is quickly approaching, I’ve been kicking around ideas for my emergency savings. Traditionally, I have simply left my entire eFund in an online savings account. Until a few months ago that had been ING even though their rates had been lagging those of HSBCdirect and EmigrantDirect.
One alternative that I have read about a few times is to stash a portion of your emergency savings in T-Bills. It is possible to invest in T-Bills directly from the Treasury Direct website, which makes it very easy to automate the process.
As I am thinking about this idea, I came across a post at The Sun’s Financial Diary on How to Invest in 4-Week T-Bills that walks through the entire process from account creation to setting up a T-Bill ladder. While there are some potential drawbacks, I like the idea of maximizing the earning potential of my emergency savings.
However, I tend to be a creature of habit and it took me quite some time to finally make the change away from my ING account so I am not sure how quickly I will act on this idea for an alternative destination for my eFund.
Have you investigated the use of T-Bills for a portion of your emergency savings? Or have you come up with any other alternatives to the standard online savings account? I’d be very interested in hearing your experiences and any problems that you may have encountered along the way, as well as the joy you’ve had in earning more on your savings.