Who else has their emergency fund invested?

[PMMM]

I have two emergency funds. The larger of the two is in CD's and the CD's pay decent rates for the times. This is my long term emergency fund.

My short term emergency fund is a money market account with check writing.

[jpg7n16]

The recommended EF is actually 3-6 months necessary expenses in cash equivalent, not 8 months expenses. So you have too much in cash IMO

Based on what you said, the min EF you could use would be:

50,000 / 8 = 6250 * 3 = 18,750

So I'd recommend only keeping $20k (give or take) in cash, and investing the rest as you please. If you like the comfort of a bit more cash on hand, but want a better return, then just don't invest a portion as aggressively.

Maybe $20k cash, $10k conservative allocation, $20k however the heck you want

[disneysteve]

The recommended EF is actually 3-6 months necessary expenses in cash equivalent, not 8 months expenses.

That depends who is doing the recommending.

Suze Orman recommends 8 months.

[jpg7n16]

That depends who is doing the recommending.

Suze Orman recommends 8 months.

Fair enough. If people want to be more conservative, that's up to them.

I base my recommendations around what I've read on the CFP website, and what I learned in my classes.

From: Let's Make a Plan

Conventional wisdom says that a full emergency fund should be equal to three to six months of living costs, while practically that can amount to three to six months of bare-bones expenses because a household in crisis presumably would reduce all expenses apart from necessities.

From: December 2008 eNewsletter

Start an emergency fund

If you don't have an emergency fund, start one without delay. Your emergency fund should have enough to cover a minimum of 3 months worth of expenses.

Besides, Suze puts a lot of weight on your FICO score, so this wouldn't be the first time I disagreed with her


I have no problem at all with people wanting access to more than 6 months expenses - but keeping it all in cash is overkill.

[lafani]

Every month, I split the money for my EF in half. the first half goes into an interest bearing account with a crappy rate and the other half goes into buying bonds which yields excellent interest if kept up to a year. However, I can liquidate the bonds at any time without penalty if I need it for an emergency.