Author Topic: Where to put emergency fund money?  (Read 1398 times)

SharpGuy

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Where to put emergency fund money?
« on: July 14, 2017, 06:33:13 PM »

What is the recommended method for storing/investing “emergency fund” money?    How “liquid” should it be?   Hate to have it in savings account hardly making any interest.  I know emergency fund money should be liquid and easily/quickly obtainable, but it seems like one could charge emergency expenses on credit card to give one enough time to sell stocks/funds to get at the money.   Would it be generally be considered too risky to have the emergency fund money in index funds?   Thanks.

Khaetra

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Re: Where to put emergency fund money?
« Reply #1 on: July 14, 2017, 06:54:09 PM »
Emergency fund money is just that, for an emergency and easy to grab at a moments notice.  I wouldn't put it in stocks or anything else that you would have to wait for it.  How much liquid cash you might need depends on what you would consider an emergency.  I live in Florida, where hurricanes like to visit.  When the power goes out, it could be out for days or weeks and being able to grab cash before the storm hits ensures that I can buy necessary/emergency things when CC/ATM machines don't work.  If I had to wait for that money I'd be in trouble.

maizeman

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Re: Where to put emergency fund money?
« Reply #2 on: July 14, 2017, 07:47:20 PM »
If you're comfortable using credit cards as a buffer, maybe the question you need to ask yourself is: "do you need an emergency fund?"

Using springy debt (credit cards, HELOCs, etc) to meet unexpected expenses and then retiring the debt by diverting new income from savings to repaying the debt or (if that's not enough to pay it off before interest kicks in) selling some of your stocks is a strategy many people use. Others feel more secure with a cash emergency fund in a high yield online savings account, or their regular bank account, or stashed in a safe deposit box in the basement (in order on increasingly rapid ability to access the funds in an emergency and decreasing interest paid on the funds while they're waiting for an emergency).

You've probably already read the MMM post on this, but just in case here's a link.

https://www.mrmoneymustache.com/2011/04/22/springy-debt-instead-of-a-cash-cushion/

privatevoid

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Re: Where to put emergency fund money?
« Reply #3 on: July 14, 2017, 08:10:11 PM »
I have a couple grand in a savings account making low interest at all possible times. Anything past that can be covered by the springy debt, but I still think it's wise to have at least a little bit of potential liquid cash.

GizmoTX

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Re: Where to put emergency fund money?
« Reply #4 on: July 15, 2017, 07:05:11 AM »
'High yield' online savings account earning at least 1%. We like Ally, Synchrony, & CIT.