After a little online and offline research and a lot of people contacting me with fantastic advice, I think the best option is to look for a high yield savings account that has a higher interest rate than inflation. Inflation where I am from is currently at 5% !!!

I started looking around and somehow got sidetracked reading all about mutual funds and other investments. I saved this post in draft and thought about it for a few days. I realize now that putting my emergancy fund into a mutual account would be silly as it would not be liquid and I could lose a lot of it. At the moment, there is a bank (building society actually) offering a pretty decent rate here:

7.15% Regular lodgements required (standing order only): Minimum €1 a month; Maximum €1000. Interest paid on first working day of each quarter.

I think that sounds like a pretty good deal considering I do not plan to touch my emergancy fund for a year. It’s almost 3% above inflation so I assume this would be the best option. The other great thing about this account is that A regular lodgement will be required so it will force me to save at least SOMETHING to keep the high rate. This account is also “instant access” which means I don’t have to give any notice if I need the funds in an … emergancy.

I actually had a lot of fun researching this and I learned a lot about interest rates. I never knew that inflation should be factored in. This personal finance thing might just work for me.

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