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WHere to keep emergency found

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  • WHere to keep emergency found

    I have 6-8 month worth emergency found in cash in saving account.

    I am putting 21% of our( me and wife) gross income towards retirement, 80% in tax protected( they are maxed out) and 20%in taxable- I am employed  and can not have another 401K to put all retirement money in tax protected accounts unfortunately. However I expect that to change in next 4 -5 years.

    Since I am not over spending I still can save some of my income( live like a resident. Would you keep that in cash or invest them in taxable account? Or would you start college found ( only up to allowed state tax deduction)?

    I have home mortgage and car loan- planning to pay it of asap. Not sure why I took loan for a car- probably because most of people are doing it. I wish I have found this blog earlier.

  • #2

    If it's truly for emergencies, it should be liquid, and thus in a checking, saving account, cash or other cash equivalent.

    Emergency fund should not be tied into a 529 plan, or subject to the whim of the market where you might find the economy crashed, out of a job, and your emergency fund at 50% of what it used to be.


    • #3
      That's a big e-fund. I don't know that it all has to be in cash, but I'd keep at least 3 months of it there.
      Helping those who wear the white coat get a fair shake on Wall Street since 2011


      • #4
        Imo keep a good chunk of it as cash on hand, immediately ready for an emergency, and the rest of it able to liquidate only relatively quickly, such as an online savings account.

        Some people might advocate using a taxable brokerage account invested in low-risk assets like municipal bond funds, but that might be more risk than you would want to invite with assets you might need to liquidate for security.