Not sure if this is the right subreddit or not, but it seemed like the most appropriate of the ones I am subbed to. Almost all basic personal finance advice consists of developing conservative spending habits, setting a modest monthly savings rate, and having an "emergency fund" usually defined as a number of months in terms of salary usually 3-6 months.
It's solid advice, but at a certain point the benefit of an "emergency fund" in cash seems a little unnecessarily conservative. I currently have the equivalent of 1 - 1.5 yearly salary invested. Most of it isn't in anything too risky, a significant chunk is in blue chips and VTI. Almost all of my expenses get filtered through credit cards first (that are paid off every month) simply to take advantage of the benefits they offer, and my total credit limit on cards alone significantly exceeds the equivalent of a year's salary.
Modern tech has made a brokerage account incredibly liquid. I have far more credit available to me than I hope to ever need with no significant debt outside of a modest mortgage and car payment. Does it make sense to maintain an emergency fund in cash? It seems like the benefits far outweigh the risks to simply invest that money conservatively, or even to take advantage of an opportunistic dip in the market, rather than sit on it as cash. I feel like between the buffer than credit provides, my own lack of current debt, and a liquid and relatively conservative portfolio it makes far more sense to risk a complete market crash coinciding with some out of the blue need for a massive amount of cash against any gains I can make on that money.
Submitted March 24, 2021 at 01:18AM by silenttd https://ift.tt/3lMszQQ
