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It's still so much work and risk for almost no gain. I have $1000, so I split it up $500 in cash, $500 in a bond. Next month, my car needs new tires or I can'

It's still so much work and risk for almost no gain. I have $1000, so I split it up $500 in cash, $500 in a bond. Next month, my car needs new tires or I can't get to work. New tires are $800, and I can't afford that half my emergency fund is tied up. I lost shifts at work because of this, but at least I got a $30 return (never mind each lost shift cost me $70). Emergency funds are for high impact, unpredictable events.

jdmichal 5y ago
I think the concepts of "emergency funds" being discussed are different here. There are the $1000 "I need cash now" emergency funds. Then there are the 6-12 month "I lost my job" emergency funds. I think you're discussing the former, while others are discussing the latter. I agree with you that you should not put the former in anything less liquid than a savings account. The latter, however, lends itself very nicely to laddering months of savings over months of layered investments. So that every month, the next month of your savings becomes free.
wonnor 5y ago
You're not understanding. You always have $1000 of non-tied up funds. Start with $1000 cash. Then, instead of investing your next $500, put it in bonds. After a year, remove $500 cash from the emergency fund and invest it. You now have an emergency fund of $500 cash and $500 withdrawable bonds.
avgDev 5y ago
Emergency funds are a safety net when everything is crashing and you lose your job. This way you don't need to sell off your stocks which would be lower if there was a crash. Otherwise, you would be realizing your loses. You seem to be looking a this from a someone that is young angle and doesn't have much expenses. My expenses are high, therefore my emergency fund is high. I keep $40k in cash, if can move $20k to I-Bonds that is $1600 a year. No other place will GUARANTEE that return. It took me all of 15 minutes. If you can offer me a greater GUARANTEED return I'm all ears.

jdmichal 5y ago

I think the concepts of "emergency funds" being discussed are different here. There are the $1000 "I need cash now" emergency funds. Then there are the 6-12 month "I lost my job" emergency funds. I think you're discussing the former, while others are discussing the latter. I agree with you that you should not put the former in anything less liquid than a savings account. The latter, however, lends itself very nicely to laddering months of savings over months of layered investments. So that every month, the next month of your savings becomes free.

wonnor 5y ago

You're not understanding. You always have $1000 of non-tied up funds. Start with $1000 cash. Then, instead of investing your next $500, put it in bonds. After a year, remove $500 cash from the emergency fund and invest it. You now have an emergency fund of $500 cash and $500 withdrawable bonds.

avgDev 5y ago

Emergency funds are a safety net when everything is crashing and you lose your job. This way you don't need to sell off your stocks which would be lower if there was a crash. Otherwise, you would be realizing your loses. You seem to be looking a this from a someone that is young angle and doesn't have much expenses. My expenses are high, therefore my emergency fund is high. I keep $40k in cash, if can move $20k to I-Bonds that is $1600 a year. No other place will GUARANTEE that return. It took me all of 15 minutes. If you can offer me a greater GUARANTEED return I'm all ears.