Hylland Capital
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Your Personal Finance Questions - Answered!

“Where is the best place to save money for an emergency fund?” 9-25

This week is the first week of ask an advisor, so we thought it was fitting to focus on questions from investors who are just beginning their retirement planning and saving.


Today’s question is:

“Where is the best place to save money for an emergency fund?”


Here’s our answer:

“Where is the best place to save money for an emergency fund?”


When we meet with clients, one of the most common first action items we give is to get some money saved up and set aside for an emergency.

By now it seems like a cliché priority, because it is repeated on every single personal finance blog. But there are some very real reasons to have this money saved up. We won’t go into a ton of detail here, but basically, it comes down to reducing risk.

Crap happens, and without a buffer you are left with Credit cards that charge high interest rates, or taxes and penalties for early withdrawals from retirement accounts. That’s no good.

And personally I find that money set aside in cash helps me be much more comfortable taking risks in my investments and hopefully achieving high returns there. Knowing that there is always something to fall back on helps me sleep at night.

But, its not fun seeing your money in your bank account earning 0.2% interest, like a lot of banks pay today. So what are your other options?


For clients, we set up short term treasury bill ladders. Today a 4 week treasury bill yields just over 2%. So, say you have $20,000 you want set aside in cash. We might invest $5,000 every week in 4-week treasury bills. Every week you have $5,000 at your disposal in an emergency, if it is not needed, we reinvest.

Today a 4 week treasury bill has a yield that is 4x higher than the average money market, and even higher than the average 5 year bank CD

In addition Treasury bills have a huge advantage for some too in that they are not taxed at the state level. I am in Iowa, one of the highest taxed states behind only California, Hawaii, Oregon, and Minnesota. My State tax rate is almost 9%. So If I have $40,000 in a savings account or money market earning 2%, that’s $800 in income that I am taxed on.

With treasury bills, I don’t have to pay that tax. They are much more tax efficient.

So if you are comfortable getting into the weeds just a bit, I think it is tough to beat the return and the tax efficiency of a treasury bill today. Most brokerages allow investors to purchase treasury bills, or you can go to the U.S. government’s site, treasurydirect[.gov] and buy from there.

Matt Hylland