Review: Switched from Installment Savings to a Parking Account (After 1 Year)
Last year, when my installment savings matured, I was wondering where to put the money and just put it in a parking account. Here are my thoughts after using it for a year.
- Pros: I can withdraw anytime, which gives me peace of mind. When I really need it, it's available the next day.
- Cons: Interest rates keep falling. It used to be in the 3% range, but now it's almost early 2%.
- Conclusion: It's great for emergency funds, but not for investing a large sum of money.
Now I keep only 3 months' worth of emergency funds in a parking account, and diversified the rest back into installment savings and bonds. In the end, I think you have to split everything by purpose.
3 answers
Agreed—for an emergency fund, a parking account is the way to go. I put six months' worth in mine too, and it makes a huge psychological difference.
But given that interest rates are falling, bringing up the old 3% range now feels a bit off. The base rate is different from back then, and writing it as if to say 'it used to be good' could mislead first-time readers. Also, everyone knows you don't use a parking account to stash a large sum. What I'm really curious about is what criteria you used to decide how many months of emergency savings to set aside. Is there a reason you chose 3 months? I base mine on monthly fixed expenses from the start, but criteria vary from person to person.