i've mentioned in the past that i keep an emergency fund of about a years worth of living expenses in cds that mature at the start of every month. it took me a while to build that fund, but it basically just sits there now.
i'm wondering now about the amount of cash that i keep that's unrelated to my emergency fund -- the stuff i have sitting in various checking, savings, or money market accounts. i used to keep just a bear minimum in these accounts to avoid any banking fees, but as we were getting ready to move, i started keeping more in our primary checking account so that we would have the money at hand at closing.
well, we've moved in to our new place and i still have a decent chunk of cash turning into cat food in a very low interest checking account. i know i should move it out of there, but i've been very busy at work and moving in and taking care of all of that stuff that i haven't considered where to put this non-emergency money.
it's pretty obvious to me that the best thing to do would be to go ahead and plunk it lump sum into an index fund (yes, i'd rather do this than cost average in because of my long investment horizon), but i just haven't gotten around to it. it got me to thinking, though, of some alternative investments for the cash:
1. extra principal payment on the house. that would basically be an immediate return of whatever the tax-discounted interest rate is on our house. in this case about 4%.
2. higher interest savings/money market. i could potentially earn about 4-5% (i'm guessing since i haven't looked at rates) annually here.
3. cd ladder. cd's are returning about the same amount (just a touch more) as some savings accounts. no way i'd bother with this.
seems to me that these are the obvious choices . . . so, i'll hopefully get around to plunking the money into the market soon -- it's the most obvious of the obvious choices.