I think the idea of having two separate accounts for "emergency funds" in savings accounts that earn less than your regular checking account is completely insane.
However, I am also married to a wonderful woman whose first instinct is to have a separate account for everything. I have a lot of accounts, but we would have a lot more if my wife went with her first instincts. The key is to NEVER tell my wife that her ideas are completely insane! (yeah, I've learned a couple things after being married to her for 43 years.)
You might consider putting your Tier 1 funds into a HYSA if you can find one that has the ability to quickly and easily transfer money to your checking account. I have a savings account that is now getting 4.6% at my brick and mortar bank and we have $20-$25K in that account to cover short term unexpected expenses. It is nice because it would even cover overdrafts automatically from our checking account. If your Credit Union doesn't have a savings account that has any better interest rates than your checking, you could see about opening a second checking account with the same credit union. 3% is good for a checking account and is much better than your current 1.3% savings account. Now, those interest rates will come down but likely the differential will stay pretty consistent.
Then I would look at opening a brokerage account with Schwab or Fidelity. You can put your second tier emergency fund into a MM fund there and get competitive returns. It would be separate from your other bank accounts which would meet the psychological needs of your wife for having separate accounts for the two tiers. It is also very liquid in that you can have it electronically transferred in your credit union account in a couple of days. Having a brokerage account it also then makes it easy for you to start to invest in broad market stock funds which would be a good option at your age if all your retirement accounts are maxed. Every month you can point to the money market holdings in your taxable brokerage account and see that your Tier 2 emergency fund is safe and growing.
However, I am also married to a wonderful woman whose first instinct is to have a separate account for everything. I have a lot of accounts, but we would have a lot more if my wife went with her first instincts. The key is to NEVER tell my wife that her ideas are completely insane! (yeah, I've learned a couple things after being married to her for 43 years.)
You might consider putting your Tier 1 funds into a HYSA if you can find one that has the ability to quickly and easily transfer money to your checking account. I have a savings account that is now getting 4.6% at my brick and mortar bank and we have $20-$25K in that account to cover short term unexpected expenses. It is nice because it would even cover overdrafts automatically from our checking account. If your Credit Union doesn't have a savings account that has any better interest rates than your checking, you could see about opening a second checking account with the same credit union. 3% is good for a checking account and is much better than your current 1.3% savings account. Now, those interest rates will come down but likely the differential will stay pretty consistent.
Then I would look at opening a brokerage account with Schwab or Fidelity. You can put your second tier emergency fund into a MM fund there and get competitive returns. It would be separate from your other bank accounts which would meet the psychological needs of your wife for having separate accounts for the two tiers. It is also very liquid in that you can have it electronically transferred in your credit union account in a couple of days. Having a brokerage account it also then makes it easy for you to start to invest in broad market stock funds which would be a good option at your age if all your retirement accounts are maxed. Every month you can point to the money market holdings in your taxable brokerage account and see that your Tier 2 emergency fund is safe and growing.
Statistics: Posted by WeakOldGuy — Sun Jun 09, 2024 11:34 pm