What to do with an emergency fund

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emergency fund

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Should I roll it into my 401K?

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hmmmm.....?

Keep it as liquid as possible. Find 2% savings account and call it a day

$30k seems like a lot but obviously everyone’s situation is different..

If it were me, I would take $12k and fund the Roth for 2019 and 2020. You need to fund 2019 no later than July 15.

Then put the other $18k in a high yield savings account. Should be able to find 1.5-2%.

For the emergency fund I’d make sure you have at least 3 mos. very liquid such as high yield savings account. Then maybe spread the rest out of varying CD 12-24 months to draw a little more interest and keep them still liquid in case you need to draw past the 3 months worth of savings. You want to keep your emergency fund in a place you can access within a couple business days of processing in my opinion but that is just my take on it.

I have 10k cash and put any over that in a mutual fund. There wasn’t an expense I’ve had where I needed more than 10k at one time and I got tired of money not earning anything.

Thanks for all the advice everyone! Yeah the highest yield I've seen has been 1.36%. Still better than 0.06%.

An Aggy posts on an LSU message board for financial advice.

These really are strange times!

I had to use an emergency fund last year. The mistake I made was calculating X months of living expense and not considering what the "actual" emergency would cost.

HKRS

YAYO

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This is an interesting comment. I had really only ever considered "emergency" as having no income. I had not thought about an emergency expense in the evaluation. I wouldn't even know where to begin evaluating such a scenario.

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My thoughts are you generally have to worry about a big expense OR a loss of income. I would suspect it is rare that both happen simultaneously unless you have a large medical issue. I would be curious as to the case where you have a large expense, loss of income and no disability insurance or anything that kicks in.

In these rare circumstances I personally would not have an issue selling stocks or other investments as needed. You can risk manage yourself into any circumstance including using every dollar you have to buy apocalypse supplies but is that really the best decision. Maybe I am just missing some very common circumstances where you have a large expense and loss of income simultaneously (maybe large natural disaster or large medical issue).

It is also important to remember all circumstances are different and some people have very steady income/expenses and some have widely variable income/expenses on just a normal basis.

Capital One 360 account