Your emergency fund doesn't mean much if things keep inflating like they are right now.
It's infinitely better to have a buffer and not need it than to not keep any buffer at all and suddenly find yourself with an income and bills to pay.
Disclaimer: I still happily purchase 20k of I bonds and EE bonds a year for diversification purposes, in addition to my index funds.
Sure, you can make rental accommodation illegal if you want your community to consist solely of homeowners -- some HOAs do exactly this -- but it's the most vulnerable who will suffer under such a policy.
It's a popular policy decision for many politicians, since owners vote at much higher rates than renters; but I wouldn't call it good policy.
That said putting more restriction on housing (even more taxes!) isn't going to improve the situation. Housing needs deregulation, not more regulation to distort the market even more.
The difference is that the metaphorical credit card of a HELOC has the house as collateral. A normal credit card has no collateral. If you go bankrupt, the HELOC takes the house, but the credit card doesn't.
Imagine, market crashes 50%, you lose your job, and what? Are you going max out your cards with 20%+ APR? Are you going to realize your losses?
Emergency fund is there to help ride out bad times, so you don't have to take shitty jobs, realize losses in your investments, sell your home or not undergo medical treatment due to financial stress.
No, that's what the line of credit is for.
Maximizing your savings/investments isn't a bad approach when your young as every $ made ads cumulative value over time. I wouldn't recommend it when you have a family.
If life were 100% predictable, and I never had to worry about a sudden expense, or a bill being higher than expected, or gas/grocery prices rising, then I'd totally be down to invest my entire net worth and live off of a portion of my paycheck, maintaining minimum balance in my checking account, and sweating bullets whenever the market dips.
I went through several weeks of unemployment last year while I was between jobs. I was fortunate enough to receive the covid+standard unemployment payments, but still had to supplement that with cash from my savings to skim by. The alternative would have been to break my lease to live with my parents, incur bad credit, potentially have my car repo'd, etc. It would have set me back several years, and wrecked my self image.
Since the demand for programmers has always been good wherever I've lived I've always opted for higher paying contracting gigs since I was never concerned about job security, i.e. before kids, I'd most likely be more risk averse and look for permanent roles after starting a family.
After I paid off my mortgage my expenses came down and after saving ~6 months of living expenses (easy w/o rent/mortgage) was able to take the leap to quit my FT job and go off on my own to create a commercial product which I worked on tirelessly until achieving my financial independence goals.
I still have some student loans, but am quickly approaching/may have already reached Zero Net Worth(hooray!) when everything is totaled up. Buying a house would be a smart move, but I'd rather hold off on that to let the market cool down, and try to find a partner who would share it with me.
Then you’re broke, and left holding a very baggy looking portfolio.
If you have a $500k HELOC and have used $200k of it for something, the bank usually has the right to force you to start making principal repayments (not just interest), to change the interest rate, and/or even in extreme circumstances to “call” the loan and ask you to repay everything ASAP. Read your fine print.
However, if you can get a HELOC, you own property and are therefore much better off and less precarious than people who don’t. Ceteris paribus, I’d rather lose my shirt in a house I own rather than a rental.
House? Mortgages have single-digit interest.
Car financing? More complicated, but often free, or even negative (I bought my car for less with financing that it would cost me outright).
Credit card? Tens of %.
I guess a "line of credit" is essentially the same as a credit card. A bank can in principle recover your credit card debt off your house, but it's difficult.
Of course this is a slightly different type of emergency fund (your money will not be able to be withdrawn that same day) but a balanced approach between multiple investments can work well. And of course it probably would not hurt to own some gold and silver safely secured as well if you are really worried about inflation and needing to quickly physically move your assets.