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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 a
by 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 agoOn 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).