Should I put my emergency fund in a high yield savings account or in a bond index fund?

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What high yield savings account? Lol
The best interest rate you get will be less than 1%. Holding cash is so hard right now because you will slowly lose overtime as rates are so low. But the stability of holding in a bank is a huge plus. I think some in the bank and some in short term bonds like mentioned is best practice rn

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HYSA is the best option. Maybe you take a chunk of it (25-30%) and put it in a short term bond ETF if you want a little more yield.

Stay clear of hi yield or long duration Treasuries. They’ll be very sensitive to changes in interest rates and you could see a large draw down.

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Thank you!!

For the noobs here, could you recommend some short term ETFs?

Thank you both for the guidance. I'm still learning and appreciate any pointers that can help me research more.
I'm going to have to enroll my kids in finance classes or something. I'm fairly well educated and none of this was taught in my almost 20 years of formal education

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I put 1/2 my emergency fund in the bond market across 3 funds - DODIX, VFSUX, and BND in varying %’s

I would not put emergency fund in bonds due to tax implications. Just keep in a savings account. Inflation is low right now anyway.

HYSA will not lose value but offer minimal interest now and probably for the foreseeable future.

Bond funds might pay a decent dividend (the three I own pay 2 - 2.5%) but can lose value. In March many lost 5-10% but bounced back relatively quickly. However, even with that dividend you might still not come out ahead. If you bought this summer you might be down 1% and have received monthly ordinary dividends of less than that unrealized loss.

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