No. of Recommendations: 5
I am currently in process of expanding our emergency fund to cover our family expenses for six months from the previous three months. My current allocation of the funds is 1/3 VMSXX and 2/3 VFSTX. I would like to get some feedback on this allocation. My own thoughts have been that the sum worth six months living expenses is just too much to keep completely in money market, and since the likelihood of the 3-6 months proportion to be needed is fairly low, I should be holding that proportion in something that will at least keep up with inflation and perhaps earn some on the top of that. Any advice would be appreciated.

The problem is that as you strech for yield, you increase risk, thereby defeating the purpose of the E-Fund (i.e. to be there in an emergancy).

I prefer ING and savings bond. The way I look at it, any short term bond fund yields will be pretty close to savings bonds. Also, as yileds rise, you canpture that increase with both ING and savings bonds since they both have the benefit of moving with rates.

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