Recent College Grad looking to invest in Rainy Day Fund

I have mine sitting in an Ally Savings Account. I think their rate just bumped up again to 1.45. Transfers are done in 1 or 2 business days which makes for getting the emergency fund easily accessible.

Low risk accounts for Emergency funds. find a savings acct and make 1%+. Last thing you want, if you were to get in a bind and needed to pull money out, is for the market to take a 2,000 point dip like it did a couple weeks ago.

I have a savings account at Barclays with a 1.5% rate at the moment. I've been happy with them

Going to offer you an alternative to the possibilities listed here, which in my mind dogmatically ignores the considerable opportunity costs of such a significant sum.

I would have at minimum 1k, ideally 1 month expenses wholly liquid.

Pay off this months bills with last month’s income.

Get that done first, and maintain it.


Then open a Roth account and use that as your rainy day fund. I like the Wellington/Wellingsy (sp?) from Vanguard.

You get tax free growth, while you can withdraw contributions (and ONLY contributions) at any time with no taxes and penalties. If allowed to “season” for just a few years, it will have grown in excess of value of even a major recession. And the difference compounds each year it is allowed to.

The key is you need to keep some constant free cash flow, and seem some liquid, and don’t raid the account for every last thing.

And DCA it in, and build with time.

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Then open a Roth account and use that as your rainy day fund. I like the Wellington/Wellingsy (sp?) from Vanguard.

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Interested to know more about this. Both of the names you mention are products with Vanguard, so not sure which one you're recommending. At any rate, I am about to have $40,000 that I need to put somewhere. About $17,000 of that will be needed by tax season next year. Probably less, but to be safe, I'm saying $17k. The remaining $23,000 can sit for another couple of years, at minimum. Likely a bit longer.

What's the best play in this scenario? Am I better off getting assistance from a financial advisor? I have little investment experience myself, so want to be sure it's directed properly.

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Savings account

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This. A 6-8 month 'rainy day' fund is supposed to be (or at least the way I look at it) readily available cash. Any sort of investment fund in the market will go up and down with the market; hence it's not very reliable as a 'rainy day fund'!

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Any sort of investment fund in the market will go up and down with the market; hence it's not very reliable as a 'rainy day fund'!

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How many years do you plan to have it in play?

More than 10?

Because if so, you can suffer a “loss” of 50% of value and still come out ahead.

It’s all about risk tolerance.

But as far as the OP goes, a guy just starting out looking to park money for DECADES, an intelligently allocated Roth is the way to go.

You simply hold a relatively smaller amount of cash in accordance to your risk tolerance and transition as the Roth/taxable funds money “seasons” at a rate that is tolerable to you.

You just don’t go greedy and commit all of your liquid assets, and you don’t commit that designated amount to a more aggressive allocation.

Call me old school but I would never invest an emergency fund. When things go bad they go really bad and the last thing you need in an emergency is a fund that fell on hard times too.

I keep mine in 5 year CDs.