The purpose of an emergency fund is not bills only
It is to protect your long-term assets from short-term problems. Without enough liquidity, an unexpected event can force you to: Sell investments during a market decline. Pause long-term contributions. Take on expensive debt. That is why cash can still play an important role in a financial plan. Not because cash creates the highest return. But because it can protect your investments. Do you have emergency funds?
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10 Comments
Himanshu Patel@himanshuu · 28d
Everyone should have emergency funds before they starts to invest. I've got money sitting in my bank since 2 years and also has a LOC for my emergency. Just in case 🙂
Freddie @freddiebar101 · 28d
Yes sir. Rule of thumb 3-6 months emergency fund
Richard Verhaeghe@ravonar · 28dEdited
Absolutely. Last year I had $30,000, a sequence of unfortunate incidents saw my Emergency Fund collapse to $-7,000.00 ($37,000 of unexpected hits). It took me two months to zero out my credit card and now I’m focusing on growing it to $50,000.00. Then I’ll double it. . Once it gets to $100,000.00 I’ll let it sit and replenish it as required. . I actually thought $30,000.00 was more than enough. - It wasn’t and it was eye opening. At least I didn’t have to dip into TFSAs or interrupt my monthly and weekly contributions. I save it on Koho at 3.5%. I do not have a line of credit.
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