Trainee investor had a very interesting post recently at his blog aprivateportfolio. He asked a simple question: does one really need emergency funds and should they be stored in cash accounts at banks?
He felt that with his employment stability (and his wife's) that emergency funds should not be invested in cash accounts, but riskier and better performing asset classes.
What are your thoughts?
Where would you put your emergency cash?
I often wonder if I would be better off having a line of credit in place and more aggressively deploying my cash. At the moment it's sitting in countrywide's online savings account earning 5.25%. I know that if the market plumetted, I'd reposition it into equities right away. Perhaps I should consider it part of the fixed income allocation - one that's artificially high right now - but timing the market seldom works.
What do you think? Are you hording cash? Do you really need all of the emergency cash you've squirelled away? Is it invested optimally?