Arguments for investing Emergency Fund in stocks.

[snafu]

I hope it's ok to remind SA participants that it's important to keep a cash stash at home. We've twice been caught in an emergency evacuation situation. The ATM machines either run out of money or shut down, credit cards can't be [machine] verified, only cash will do. We were surprised gas stations closed and those few who remain open had long, long lines. The 1st time the police forced evacuation, I was able to cobble together $ 100. from different places in the house including DKs piggy bank. The 2nd time we were told we had to leave I had $ 200. in our home safe. This has scared me enough to keep between $ 200. - $ 500. cash [at more risky time] which includes the giant coin jar I'd likely not be able to wrestle down to the car. I never bring the car home with less than half a tank of gas, tired anxious to get home after a busy day, I'll stop and top off.

I'm at the point of believing if I take action, I'll stave off Murphy's Law. We've gone so far as work out who to call in another city, where to meet up out-of town, list of what to grab walking out the door and an emergency kit in an old backpack in the trunk...likely over-the-top

[creditcardfree]

I hope it's ok to remind SA participants that it's important to keep a cash stash at home. We've twice been caught in an emergency evacuation situation. The ATM machines either run out of money or shut down, credit cards can't be [machine] verified, only cash will do. We were surprised gas stations closed and those few who remain open had long, long lines. The 1st time the police forced evacuation, I was able to cobble together $ 100. from different places in the house including DKs piggy bank. The 2nd time we were told we had to leave I had $ 200. in our home safe. This has scared me enough to keep between $ 200. - $ 500. cash [at more risky time] which includes the giant coin jar I'd likely not be able to wrestle down to the car. I never bring the car home with less than half a tank of gas, tired anxious to get home after a busy day, I'll stop and top off.

I'm at the point of believing if I take action, I'll stave off Murphy's Law. We've gone so far as work out who to call in another city, where to meet up out-of town, list of what to grab walking out the door and an emergency kit in an old backpack in the trunk...likely over-the-top

Yes, this is a good reminder. I plan to have more cash in our home before the end of the month is out! I too could raid the kids money and actually have quite a bit.

[scfr]

Losing money to inflation is not a "guarantee"

[Caoineag]

Nika, I actually plan on doing something similar. Though the first layer will be cash (1-2 months), the remainder will be invested. I agree that a 50% drop after several years of growth still puts you ahead.

That said, the reason the advice for most people is cash, is because most people should be in cash. I know too many people who freaked out at the market downturn and moved their investments to something "safer" close to the bottom and thus locked in their losses. Imagine them doing that with their emergency fund. Not good.

If you already know you can handle a downturn and can keep investing through the downturn, including topping off the emergency fund, its a good way to build the funds up.

[LivingAlmostLarge]

We used to invest our EF and right now we don't. I like to think that EF like finances are personal. Only you know the situation. It's a good rule of thumb for most people to not invest their ef. However for others it's fine.

When we were really young and broke we had no extra money for EF. Our main thing was just staying out of debt. But now we have more flexibility to have cash on hand. We have cash now to buy a second home without worrying if we have to sell. I like that. But at the same time when we didn't have the ability I used to wonder what I would do if I did. But now we have more expenses and more responsibilities.

[tripods68]

I used to be comfortable keeping "all cash" in the bank mainly because I the lack the knowledge and the confidence. I grew up very poor. My parents work and didn't really know how the market works. But as I got older, college, etc..etc...I became interested in personal finance and the stock market. Bank didn't pay that much either and just sit there with hardly no return on investment. Long story short, the best and the most efficient way to grow money and is having the money invested in the market to work for you.

Some people mention here already about the cost of inflation, but also the "opportunity cost" of not investing in the market. I lose sleep overnight if my cash is not working for me. If I don't see any dividends payouts at the end of each month I feel depressed. Sure there are bad days but stick to long term and with proper asset allocation to manage risk your money will grow and continue to grow. You should have some money in the bank but the rest should be invested in the market to work for you.