| Today's rate is 5.05%, compared to DCU's MM rate of 3.05, so it's good for a
money market account, although it's more difficult to get to all your money
than a DCU account. You'd have to call and get your exact balance, write a
check for that amount , but your local bank might not give you
immediate access to those funds. If you have >$2500 with GE, than you
can wire money to your bank for a fee. You can always write checks,
it's just cumbersome to close the account.
But if you probably won't need the money, try a DCU 6 month CD, 4.51%.
Or, Schwab quoted me a 6 month CD ($5000 min) at 5.8% and a 6 month
treasury (10000 min, $49 commission) at 6.41%.
So plug in how much access to your money you need, how much you have, and
your state tax (would GE money be taxed at a higher rate for MA residents?)
and pick an option.
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| Raghavan,
How much do you want to set aside? What you mean by liquid?
Three or four months' living expenses can be quite a stash. Most standard money
market funds will let you in for one or two grand. They're paying about five
percent lately, which is better than bank demand deposits. With phone exchange
and check-writing privileges money fund assets are pretty liquid. With most
regular MMFs you'll pay fed, state, and local tax on interest.
Slightly better for a permanent liquid hoard are U.S. savings bonds. Yeah,
sounds stodgy, but the interest is accrued fed tax-deferred and is free of all
state and local tax. They're available in small denominations and redeemable at
any commercial bank. Rates are adjusted periodically. Safer than any bank or
money fund.
For a bit more yield you can buy T-bills by mail directly from a local Federal
Reserve Bank (Boston, New York, etc.) without any fees (Schwab's $49.00
commission is pretty steep for such an instrument; I'd do it myself). However,
price of admission is $10k for 13, 26, or 52 week bills. You can get into a
two-year T-note for $5k. To exit before maturity you'd have to use a broker.
Yield at the latest 13-week T-bill auction was just under 6 percent. Interest
is free of atate and local tax, but you do pay fed tax.
Send me e-mail if you want details.
-Jerry
P.S. If you sign up with GE Plus, don't be surprised at the volume of junk mail;
everything from toaster ovens to life insurance to time-share scams.
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