24 - Emergency Fund Sizing for the Enterprising Investor

Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a review. Your feedback helps me to improve the podcast and grow the show's audience.  Support the Podcast on Patreon This is a podcast supported by listeners like you. If you'd like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. You can find out more information by listening to episode 11 of this podcast.   Emergency Fund Show Outline The full show notes for this episode are available at https://www.diyinvesting.org/Episode24 Emergency Fund Sizing: Recommended Size: 1 year Mainstream Alternatives:  3 months 6 months $1,000 $10,000 Why? Liquidity is all-important for investors Value investing requires managing risk and accepting volatility Lack of liquidity can cause you to sell investments when your stocks are undervalued and priced too low A strong emergency fund protects you from this possibility Where should you store it? (Hint: Maximize Safety) You should maximize the safety of your emergency fund. Don't worry about maximizing the rate of return you receive.  Store your emergency fund in a government guaranteed account. This can be with either an FDIC-insured savings account. I believe Ally Bank is a good option. A great alternative is TreasuryDirect.gov where you can lend money directly to the US government. Emergency Fund money would obviously need to be invested only in short-term government bonds. (3 months or less to maturity)