How to keep your investments as liquid as possible

It is one thing to invest your money, keep it there and watch it grow over time.It is always exciting when this happens. It is another thing to invest your money and have access to it in case of an emergency.Both are equally important.So if you're looking to invest your money, but still have some in reserve, let's look at how to keep your investments as liquid as possible.

Liquid investments are cash, or readily marketable investments that you can transfer into cash quickly.Stuff happens right?And usually it costs a fair amount of money to fix it, or replace it, or whatever else you have to do with it.It's important to have at least three to six months of emergency cash reserve somewhere just in case you need something to live off of.Here is a list of places you can invest your money in, and still keep them as liquid as possible.

- Checking Accounts- very tradition in thinking and you can take money whenever you need it.You won't accrue any interest with this account; or very little.These types of accounts are usually used for everyday things, but if this is what you feel comfortable doing, then go ahead and do it.

- Savings Accounts- you can open a savings account with any bank or credit union but most do not have an incredibly high rate of return.If you are not concerned with this, then this might be a great place for you to start.You can pull money out whenever you need to, and put it back in just the same.Some banks require you to have a minimum balance though, and will have a monthly fee if you do not meet their requirements.They do not however keep up with inflation, so by placing your money here you lose valuable purchasing power.
- Money Market Accounts- These too are offered by banks and credit unions but do not confuse them with money market funds.They may pay a slightly higher interest rate than checking or savings accounts but you will have a limited number of transactions you can make.Once you go over your limit you will be charged a fee.They also usually require a higher minimum balance, and naturally if you go below that balance you will be required to pay a fee.
- Money Market Funds- These types of funds are not offered by banks or credit unions, but by brokerage houses and mutual fund companies.They are not as safe as money market accounts because they are not FDIC insured.
- CD Investing- Certificates of Deposit are types of investments that you can make when you have money you know you are going to need or use in the near future; not immediately.CDs come in different maturities, such as three months, six months, or up to five or ten years.They do however require at least $500 to open.The interest rate is generally higher than savings and checking accounts, but you will also be charged an early withdrawal fee if you take your money out before the life of your CD is up.Naturally, the longer life or term of your CD the better the interest rate.Remember however that if you choose a long term and need the money before then, you either won't be able to take it out, or you will be charged a fee.You might also lose out on better interest rates if you have a long term CD.You can not move your CD to a higher paying one until your term is up.Along with CD investment you can also ladder your CDs to take advantage of rising interest rates.You must choose a variety of different term periods and then divide your money among all of them.This may allow you to have longer term CDs and still help you get great interest rates and cash out the shorter term CDs.It will also give you a little money to invest into higher interest CDs.
- Credit Unions- Another option may simply be to join a credit union.They offer the same services as banks, but usually charge fewer fees and give slightly higher interest rates.In order to become a member you must belong to an affiliated group.Look to your employer to see if it is even an option as many large companies offer this perk.You can also look into joining a credit union through an alumni association, religious organization, or possibly through a family member that is already a member of a credit union.

Always be sure to look farther than your local bank or credit union for the best possible interest rate for your liquid investments.Look on the internet to find information about the best interest rates offered throughout the entire country.Compare the rates to that of your bank and local credit unions, and make the most of your money.Be sure to invest your money with different levels of liquidity.For example, just having a 401K will not give you quick access to cash if something happens, but will save you money for the future.Only keep as much money in liquid investments as you think you are going to need.An emergency account is exactly that.Don't tempt yourself by leaving way more money in it than you'll need.