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    Where Do You Keep Your Emergency Fund?

    Hi everyone,

    I had a question: where does everyone keep their emergency fund?

    At the moment, I keep mine in Premium Bonds. They’ve done okay, but I’m not convinced the returns are keeping up with inflation, so I’d be interested to hear where other people hold theirs and why.

    Thanks, looking forward to hearing your thoughts and opinions.

    Where Do You Keep Your Emergency Fund?
    byu/Secure_Beginning_939 ininvesting



    Posted by Secure_Beginning_939

    29 Comments

    4. Forded_Fiction24 on

      Wealthfront HYSA. Easy and I don’t look at my emergency savings as an investment account anyways. Whatever it’s paying is fine with me

    6. analbuttlick on

      I know people disagree with me here but i have no emergency fund. Maybe some pocket change around 5k in case something on my car breaks or i need a new fridge.

      I put approximately 20% of my monthly salary into stocks. If there was an emergency i could just not do that one month.

      In addition i don’t fear losing my job nor anything like that since i live in Norway. So other than having a small amount of cash just in case, im usually all inn all the time in the market

    7. valchon on

      The point of an emergency fund is risk free liquidity, so a HYSA is a good option.

    14. 3rdIQ on

      Short term: HYSAs at two institutions, Long term: CD ladders at two financial institutions.

    20. XSC on

      I am tempted of moving 90% of my emergency fund to a good performing fund like QQQ. Is that a stupid idea? Have had it in my HYSA and I just feel it is wasted away.

    25. Various_Couple_764 on

      government bond barely keep up with inflation. Inflation in the US averages 3.2% per year. so to safely stay ahead of inflation you want about double that in yield. So about 6%. A preferred stock fund like PFF pays a yield of 6% and the share price doesn’t move much. And if you invest in BBB rated operate bonds you can get a yield of 7%. BBB rated CLOs funds can generate a 8% yield with less risk than a BBB rated corporate bonds. Or you could get 9% from BDCs or MLP funds.

      The big difference between a bank or money market account and an ETF is the price with you withdraw your money. With a ETF the price per share moves up or down so you could loose or make money by selling shares. Banks and money market accounts fix their share price to the value of thedolar so you won’t loose or gain money when you withdraw the money.

      So the best thing to do is to keep about 6 months of emergency expenses in a bank or money market account. Aythingabove that invest in dividend ETF. PFF is a good on becasuteh price of preferred shares is very stable and the yield is 6% SCYB is a BB rated corperate bond fund 7% yeild. CLOZ 8%.

      So in a taxable brokerage account keep 6 months of cash in a money market acount with a goody yield. then invest the rest into a dividend fund. Don’t reinvest the dividend. PFF pays montly so you will recieve 1 months worth of the yearly dividend payout each mont. You can keep that cash in the money market account, spend it, or reinvest. PFF generates qualified dividends so you will pay less tax than Ordinary work income. SCYB and CLOZ are taxed as ordinary income . EMO 9% yield pays more than PFF and is also qualified butte share price can move a lot more. QQQI has a 13% yeild but eh share price can move a lot. but QQQI dividends ar not taxed for 6 years and then it generates qualified dividends like PFF and EMO.

      Over time you could keep your 6 month emergency cash fund while eventually you could generate 2K to 3K a month of income from dividends. I retied in my 50s with 5K a month of income from dividends in my taxable brokerage acount.

    26. DoubleIntroduction25 on

      5 T bills on auto roll, 2k face value each, 6 month term with 2k kept in a money market. If I lose my job I turn off auto roll and have 2k freed up every month.

      Having my emergency fund in short term rolling t bills helps me not spend it or invest it since it isn’t just cash sitting there as it were. Also short term t bill rates tend to be similar to but a little higher than money market rates which doesn’t make a huge difference but it helps.

    28. RJ5R on

      If this is an actual liquid emergency fund

      It should be kept in an easily accessible FDIC insured HYSA

      If this is just a sink fund to be used on a large purchase (ie downpayment for a house, a car, a large home improvement project, etc) then put it into whatever HYSA or money market savings that gets the highest rate

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