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Goodbye liquid funds
I’m slowly converting my emergency fund to investments and making it less liquid.
I’m also spending some of it.
I realized that having a cash account doesn’t serve me that well when it could produce money.
It is frequently recommended to keep a certain amount of cash completely liquid for emergencies, and I will, but I can also use a credit card if necessary and then sell some investments to pay the credit card off before the end of the month.
Holding the money in a savings account consistently felt too off.
Will I Put All Of My Money Into Investments?
No. I will keep some of it liquid, just less.
Some people believe cash is king. Well, I don’t.
As some have seen in previous articles, keeping cash completely liquid is the same as burning your money due to increasing inflation.
I’m not going to make any recommendation as to what you should do, but I am sharing the shift in my mentality about the liquid emergency fund.
In the past several years, society has become cashless.
Cards are accepted practically everywhere, and when a business entity doesn’t accept a card, it causes quite the uproar.
Now That I’m Moving Away From The 1 Year Emergency Fund, Here’s What I’m Doing:
1. I’m focusing on about 90% investment strategy.
I aim to keep 90% of my net worth in a mixture of primarily aggressive investments (since I have time on my side) and some hedges.
Once again, depending on your age bracket will determine your investment strategy.
This investment strategy won’t make sense if you have more years under your hood.
2. Keeping less cash on hand in general.
If I have extra cash, I’ll invest it.
If I want more security on these investments, I will move them into more secure investments like conservative index funds, bonds, etc.
3. What about when the market crashes?
The markets will never stop crashing, which is why I will slowly transition into more conservative investment strategies over time as I accumulate more years.
The cool thing about the markets is that they always recover – eventually.
I will still keep some cash on hand and never put all my eggs into one basket.
I’m a firm believer in diversification.
4. Education
As I consistently increase in financial education, the more I can apply this knowledge to my financial portfolio.
I am no financial expert, but I know that sitting on cash isn’t helping me increase my net worth.
Using my credit card each month and getting cash back will produce more money than leaving my money in a savings account.
This content is for informational purposes only — not professional advice. Consult a qualified professional before making any major decisions.