Aug 31, 2021
You are probably already familiar with the concept of reserving an emergency fund for unexpected expenses. You may even already have one in place. However, deciding how much to reserve or where to keep this money can be tricky. We dedicated this episode to exploring why you should maintain an emergency fund, how to determine how large yours should be, and a few different savings options that can be safe & accessible, while still giving you the greatest possible returns.
[02:09] Managing Emergency Cash – Why it’s crucial for everyone to set aside some emergency funds and the importance of keeping your cash in the right place.
[05:23] How Much to Save – Grant shares a method of estimating how much you should save as an emergency fund based on your income, expenses, and risk tolerance.
[08:31] Too Much in Cash - Why it’s a better idea to have your emergency savings as investments and the ideal investment method for your funds.
[12:17] CD Ladder & High Yield Savings – Grant explains how using multiple Certificates of Deposits and high yield savings accounts can help you make the most out of your emergency cash.
[16:36] Money Market Mutual Funds – How money market mutual funds work, how they’re different from money market savings accounts, and some of the recent reforms related to money market mutual funds.
[24:14] Types of Money Market Funds – How the reforms led to the creation of two types of money market funds, the differences between the two types, and what you should keep in mind about parking your emergency cash in a money market fund.
[28:24] Government Funds – The feasibility of putting your emergency cash in government funds and the benefits of utilizing multiple methods of investments.
Resources:
Money-Market Funds Buckled in Two Crises in a Row. Regulators
Look to Fix Them Again:
wsj.com/articles/money-market-funds-buckled-in-two-crises-in-a-row-regulators-look-to-fix-them-again-11626687001
Firms Wary as Money-Market Rule Changes Studied After Covid-19
Run:
wsj.com/articles/firms-wary-as-money-market-rule-changes-studied-after-covid-19-run-11630056602