After reading the following article I am been considering my emergency fund.
https://blog.wealthfront.com/no-need-to-fear-market-corrections/I started my work career and investing in 1999, so I was a part of the dot.com bubble, but I didn't have that much money at risk. I did, however, have more skin in the game during the 2007 collapse, so I know how it is to get a brokerage statement showing a -47% return on my porfolio. Ouch.
No doubt, it will happen again at some point.
Yes, I know I can't time the market, so please don't let the hounds out on me for that one.
I am looking at FIRE 2020 and my consideration now is that I am thinking of padding my emergency fund with 2 years worth of cash (money market or higher rate saving account.) In the event of a downturn in FIRE, I would switch to this source while my portfolio heals. As the article alludes to, historically, you wouldn't be looking at more that 18 months for your portfolio to be back where it was before the crash.
I have maxed out my IRAs and my 401k and HSA this year, so all excess funds have been going into a brokerage.
Thoughts? Face punches?
I know the 4% rule accounts for events like this, but I would hate to use invested funds that have just lost half their value.