Where can I invest my money if I want to be able to easily access it in case of an emergency?

I am starting out in investing and I have $8,000 to invest and can also invest an additional $500 every month. Currently, I have a checking account, but no savings account. I am a risk taker and want to earn good interest on the money deposited, but just in case of an emergency, I might need to take back the money. Do I need to open a savings account, CD, or money market account? I want to earn at least 2 to 3 percent in interest. Alternatively, should I invest this money in a mutual fund?

Banking, Investing, Mutual Funds
Answers
Sort By:
Most Helpful
November 2018

The first item you should take care of is as you suggested, an "emergency fund". A savings account you can use as a buffer against any unexpected expenses should they arise. That way you don't have to go into credit card debt, or pull from investments at an inopportune time (during a correction or recession). A high yield savings account at Ally, Marcus, Synchrony, or a variety of other online banks are a great place to stash emergency fund cash due to their higher than average interest rates. 

Secondly, while establishing your emergency fund, you may also wish to start setting aside some cash in a brokerage account or IRA. Depending on your tax situation, a Roth IRA may make sense (if you're in a lower tax bracket, it's likely more advantageous to use a Roth). Within these accounts, using a diversified ETF or index fund (for their low costs and tax efficiency) to get started investing is a great way to go. 

Best, 

November 2018
November 2018
November 2018
November 2018