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Contributor

What do you think about putting emergency funds (EF) in USAA Tax Exempt Intermediate-Term Fund (USATX)?

 

As background, I am 29, single with no house, car, big spending plans, or debt and with a stable job. Already maxed my TSP and IRAs and at a 25% tax bracket. I don't need to worry about housing (or buying a place) and repairs as its all paid for. I don't need a car for at least the next 3 years.  I have enough cash in my normal checking (usually runs about $5k+) to cover anything out of ordinary.  Now my problem really is with the interest not even covering inflation.

 

USATX seems to be the solution to all that.  

  • Liquidity = Was told you can get funds into USAA checking in approximately 3 days of selling the fund
  • Intermediate Term = I have checking cash to cover short term emergencies
  • Tax Exempt = Not having to pay taxes means more return
  • Low/Medium Risk = Not too volatile, but past performance (even if it does not ensure future returns) and returns is positive.  Understand that if interest rates go up, bond return will drop.
  • Expense Ratio = Slightly high expense ratio (0.55%) when comparing to say TSP expense ratios but not too bad for a managed fund.  

Any advice?  Any other ideas on just beating inflation for the emergency fund?

1 REPLY

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achang6,

Thank you for your comment/question regarding the USAA Tax Exempt Intermediate-Term Fund. We would like to put you in touch with an investment specialist who can take a closer look at this situation and offer you assistance. If you would, please message us here:http://bit.ly/U7b7Jj. Thank you.