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It's only potentially outdated advice for people that are already financially sound, have a large amount invested, and understand the risks. "Don't keep an emer

It's only potentially outdated advice for people that are already financially sound, have a large amount invested, and understand the risks. "Don't keep an emergency fund, just sell your stocks or use credit" is really bad advice for people trying to get ahead for the first time.

nostromo 6y ago
If you're trying to get ahead, sitting on six months of cash that could be put to productive (and compounding) use over the course of your entire career is even worse advice.
- Trasmatta 6y ago
  No, it's not. Investing that money would be about the long term horizon. Like, 10-30 years at least. If you're trying to get ahead, your current goals should be getting and staying out of debt, and preparing for emergencies. What happens if you throw that emergency fund in the market, there's a crash, and then you lose your job in six months? Get out of debt. Build an emergency fund. Start investing. Then re-think your emergency fund strategy if you really want.
- dukeyukey 6y ago
  The 'productive' use of six months living expenses in an account is being easily accessible in times of crisis. Like, my whole department got let go not long after Covid hit. Had I kept my savings in stock, I'd have sold them at a major loss, because stock market falls and job losses tend to happen at the same time. By keeping some savings separate, you can decouple these things, to an extent. You don't want your emergency money to rely on a good economy.
  - jjnoakes 6y ago
    On the flip side, if you have six months or more of expenses in a brokerage account, you don't need to sell all of it day one. And if you sold a little at a time over six months during the covid crash, it wouldn't have been as bad of a loss. And you need to compare that loss to what you would have had if you sat on cash for all of the time leading up to the crash too. I'd be willing to bet keeping it cash would have been worse in most cases (depending on specific amounts and time frames and monthly expenses).

nostromo 6y ago

If you're trying to get ahead, sitting on six months of cash that could be put to productive (and compounding) use over the course of your entire career is even worse advice.

Trasmatta 6y ago
No, it's not. Investing that money would be about the long term horizon. Like, 10-30 years at least. If you're trying to get ahead, your current goals should be getting and staying out of debt, and preparing for emergencies. What happens if you throw that emergency fund in the market, there's a crash, and then you lose your job in six months? Get out of debt. Build an emergency fund. Start investing. Then re-think your emergency fund strategy if you really want.
dukeyukey 6y ago
The 'productive' use of six months living expenses in an account is being easily accessible in times of crisis. Like, my whole department got let go not long after Covid hit. Had I kept my savings in stock, I'd have sold them at a major loss, because stock market falls and job losses tend to happen at the same time. By keeping some savings separate, you can decouple these things, to an extent. You don't want your emergency money to rely on a good economy.
- jjnoakes 6y ago
  On the flip side, if you have six months or more of expenses in a brokerage account, you don't need to sell all of it day one. And if you sold a little at a time over six months during the covid crash, it wouldn't have been as bad of a loss. And you need to compare that loss to what you would have had if you sat on cash for all of the time leading up to the crash too. I'd be willing to bet keeping it cash would have been worse in most cases (depending on specific amounts and time frames and monthly expenses).