My dad told me my emergency fund was too big and I should invest the extra instead

After hearing him say I was losing $300 a year to inflation just sitting on cash, I moved half of my safety buffer into a high yield savings account and now I earn like $40 a month on that same money has anyone else had a parent call out their savings strategy like that?

3 comments

3 Comments

patricialee15d ago

Yeah that's solid advice actually.

linda50015d ago

Oh man, yeah that's a smart way to look at it. I mean, I thought I was being clever by splitting mine up too, but I didn't think about the instant access thing. I keep a grand in my regular checking account just for emergencies like a car breakdown or a sudden vet bill, then the rest in a HYSA for stuff like a new roof or a big medical deductible. That way I'm not scrambling to sell investments or wait for a transfer if something real bad happens. It's kinda nice to have that buffer without feeling like I'm missing out on growth completely.

robert_anderson6915d ago

Haven't you considered what happens if that high yield account locks your money up for a few days when you truly need it? A lot of those accounts have transfer limits or take a business day or two to pull cash out. I keep a smaller chunk in a regular savings account where I can grab it instantly if the water heater blows up or something, then the rest in a HYSA for less urgent things. Your dad's not wrong about inflation eating away at cash, but there's a real cost to not having quick access when you need it.