How should I invest my emergency fund so that I keep earning interest on it?

I have established a solid emergency fund. I know that it needs to remain liquid, but I still want to earn interest on the amount. Where do you suggest I invest the money?

Investing
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2 weeks ago

Swanger, Rose

Knoxville, TN
100% of people found this answer helpful

Hello,

You’re correct in keeping your emergency fund liquid, meaning not invest the money, which is hard to do at the present environment. Seems everyday the market hits a new record high, and here you must earn a paltry yield in order to access to the emergency fund without losing principal or being penalized by an early withdrawal. Thus, a better way to handle your emergency fund is to develop a CD-ladder. Invest your money in a 3-month, 6-month, 9-month, and 12-month CD. As you can see, one of your CDs matures every 3 months, and hopefully it will lock into the next higher rate. Yet, at the same time, you have the flexibly to access to the account in case of contingency. Best!

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