MarketWatch writes "How to earn more on your emergency savings." The piece explains, "When it comes to emergency savings, a common practice is to hold money in a liquid money-​market fund or a bank checking or savings account. But I recommend an alternative: a high-​grade, short-​term bond fund. For one, the money can be just as liquid -- unless, of course, you need to write a check today. Suppose you need $​2,​000 for car repairs. You could move $​2,​000 as of the end of today from your short-​term bond fund into your money-​market fund held at the same institution and use the funds tomorrow to write a check to cover these expenses. Second, you could get a better return on your money for little added risk. I compared the annual returns for each year from 2002-​2016 on Vanguard Group'​s Prime Money Market Fund VMMXX and Short-​term Bond Index Fund VBISX (​Investor shares). The average return on the short-​term bond fund was 3.​05%, which is more than twice the money-​market fund'​s 1.​38% average return. I also compared these two funds' quarterly returns for the 41 quarters through the first quarter 2017, which is the longest period available online at Vanguard.​com. This short-​term bond fund earned more than the money-​market fund in 31 of the prior 41 quarters, and the worst one-​quarter loss on the short-​term bond fund was 1.​14%." It adds, "This also supports my contention that the short-​term bond fund is not materially riskier than the money-​market fund. Daily and monthly returns are not available, but the nature of high-​grade short-​term bond funds ensures us that the maximum daily and monthly losses are negligible."

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