Early Retirement Extreme Forums

I currently use a credit union checking account for near term (never holds more than 6 months worth of expenses), and I have a long term IRA. So what type of account should I use for the in-between?

My current line of thinking is to open a savings account with an online bank since they usually offer better rates on CD's. Physical locations and ease of withdrawal wouldn't be important for a mid-term account anyway.

What form of account do you use to hold and invest money that you will want to use in 0.5-10 years?

I have a taxable investing account where I keep everything above ~3 mos expenses. I have about two years bare bones expenses in a MM and intermediate-term muni bonds. Everything else there is invested per my overall asset mix. Including a Roth IRA, I have about 6 years at my current spending level in the account(s) altogether. It gets the bulk of my saving/investing contributions these days and I'm hoping to have 10 years or a little more in 2 years when I check out of the corporate world.

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For monies I actually expect to spend in the next three to five years, its mostly bond funds (split between regular and inflation-protected) and cash/savings accounts. But for stuff I am not actually anticipating spending, I would put in a regular taxable investment account.

Also, one of the more emotionally useful calculators at www.portfoliocharts.com is the one that reveals maximum drawdowns in both percentages and years or selected portfolios. I purposefully model off ones that minimize the maximum historical drawdown time to only a few years. This is one of the first thing I look at when somebody says, "What do you think about investing in X, Y and Z?"

I've got about 1.5 years of expenses sitting in cash in the brokerage account right now. Letting it sit there is comfortable for me because it's available for investing opportunities(*) and I can move it to a checking account in a day or have a physical check in a week (barring any unanticipated freeze of accounts). We typically have 3-6 months expenses sitting in checking accounts.

(*) Usually these are short term capital gain opportunities offering 2x CD rates, but can include moving long term investments. For instance, earlier this year, I bought & sold gold for a 7% gain... should have held onto the gold, but the short term gain met my goal.