Quote:
Originally Posted by sweeps
An argument for having a cash EF is you don't want to cash out your stocks and mutual funds at an inopportune time. Usually you will lose your job during a recession -- the exact time your stock holdings may have dropped. Essentially you'd be taking a double hit to your net worth by liquidating your stocks when they are temporarily down.
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I understand this logic, but how many times do you lose a job. Believe me, I know it can happen. It happened to me this past year. But, it was the first time in 10 years. Had I had that money in a money market account waiting for the day I lost my job, I would have lost out on a lot of money. Agreed that a recession and a job loss could (and most likely would) happen in the same year, but again, I have made so much more in the last 10 years in MF and individual stocks that a 10% downturn like this year. Here are the numbers: 15K at 4% for 10 years = 22K. 15K at 10% for 10 years = 40K - 10% loss during teh recession year (like now) = 36K. I just guess that I will take my chances.
Or, it could be that I just don't have as many "emergencies" as others do.