Tuesday, December 11, 2007

Moving my Emergency Fund

As it stands now, I have my Emergency Fund spread across four institutions:
  • $896.46 with ING Direct

  • $6.57 with HSBC Direct

  • $101.02 with ICICI Bank

  • $101.23 with Canadian Tire Financial Services
The reason the funds are spread out like this is that I used a portion of my Emergency Fund to investigate these online savings accounts, and I've simply kept the "exploratory" funds in their respective accounts, rather than transferring everything back into the ING "home base".

I've been doing some thinking about where I want my Emergency Fund to sit, and I've decided that HSBC is a good choice, because of its outstanding access methods, which include ABM, online transfers, and online bill payments. HSBC also has a great rate offering, currently at 4.25% (although this will likely drop in the near future, given the recent drop in the prime rate). Therefore, in the event that I need to get at my Emergency Fund quickly in, well, an emergency, I think it's a good idea to keep it at HSBC. So, I've decided to change the allocation of the fund to the following distribution:
  • $0.00 with ING Direct

  • $1,003.03 with HSBC Direct

  • $51.02 with ICICI Bank

  • $51.23 with Canadian Tire Financial Services
I will continue my bi-weekly $25 contributions to the ING account, which will give me a solid $1,000 in one place, with good accessibility, as well as token amounts earning interest in each of the other accounts. The idea here is that HSBC is my "first line of defense", and the other accounts are only touched if I really need them. The goal is for me essentially to forget about the non-HSBC savings, and let them grow until an actual emergency comes up. For my non-emergency savings, I'll continue to use ING as my primary account.

I've initiated the fund transfers, and I'll let you know how the new setup feels once the dust has settled.

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