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Comment by Shatnerz | Hacker News Reader

You don't. Emergency funds are for emergencies.

Higher yields are possible with various different investments but they all come with additional risk. You do not want to have an emergency fund they may drop in value during a period which you may need to draw on your emergency fund, such as a market downturn that leaves you unemployed.

Similarly, you want to be able to access emergencies funds quickly. Emergencies are generally unexpected. If you need to wait for funds to unlock or for sales to settle, then it could possibly be too late.

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> You don't. Emergency funds are for emergencies.

^^^^

This, this, this and THIS !

Emergency funds = cash = it goes into a boring bank account.

Full stop. No arguments.

If you have to "sell" or "close" something in order to get it, it is NOT emergency funds.

If there are conditions on your access to it, e.g. "n Day Access" then it is NOT emergency funds.

Your emergency funds are sacrosanct. Put them in the most boring bank account with the most boring bank you can find, maybe with two banks just to be safe (if you live in the UK, put it with NS&I where the account is 100% guaranteed by the government, i.e. over and above the £85k guarantee that is available with normal banks).

If you have spare cash sloshing around after you have put a decent chunk aside in your emergency accounts, then you can invest / chase interest rates with that. But DO NOT mess around with your emergency funds.

Honest question: unless you're American, what kind of emergency could require a large volume of cash in less than a week?

In the US it makes sense for medical bills or a broken car or something but in a country with sane healthcare and public transit, I'm having trouble thinking of anything.

Even in such countries one could rely on a car. Some medical things aren't covered fully or require prepayment to be reimbursed later ( e.g. dental or glasses, but we're talking a couple od hundred euros max, not tens of thousands).

There's also natural disasters or unexpected maintenance, appliances dying, roof/plumbing leaking, etc.

In general though, i think for most EU countries a few thousand euros is enough of an emergency fund, depending on circumstances of course.

getting across a border to a country that isn’t getting shelled, without access to an ATM because they’re in pieces.

getting across a border to a country that isn’t shelling its neighbor, without access to an ATM because they’ve been frozen.

there are a few cases where “hundred dollar bills stuffed in the mattress” is actually the way to go!

A meteorite strikes your house and puts a hole in your roof in the middle of rainy season. You will likely need cash quickly. You may be able to get an invoice or payment plan, but a lot of workers who will patch your roof get ripped off and demand cash up front as a result.

Other examples:

- car transmission fails at a crucial time such as during travel (now you may need accommodation)

- boiler breaks

- AC failures during summer

Really any major house related or car related issue. You could argue that these are maintenance costs and not emergencies and I would agree, but not everyone approaches these the same. It is also entirely possible for several affordable and expected events to unexpectedly happen at the same time.

I keep about $500 in small bills hidden I’m my car. I have been on road trips where I have had car trouble, and the small town mechanic nearby only takes cash or local checks. When it happened, I had to get a ride to an ATM with an huge fee.

I also live in the PNW, which is way overdue for a >9.0 earthquake. I keep some cash in a safe at home because it could be a week (or more) before phone systems are up and working again for things like gas stations, etc.

This. Some money on a regular savings account, and some more as cash.

Regular savings account offers interest 5-6 percent below even paper inflation. How is this advice on-topic, when OP is asking how to AVOID EXACTLY THIS??

The advice is perfectly on topic because OP's fundamental premise is wrong.

The thing is that you can't protect your emergency funds against inflation. The point of emergency funds is that you have them readily available -- not to invest them.

If inflation eats your emergency fund then you increase the size of your emergency fund to compensate for it.

It's kinda like paying for IT security; with luck it'll just be a cost that you never see any benefit from. If not, you'll be glad you have them.

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