Business
Many of us appreciate the concept of having some money reserved and saved to be used for unexpected expenses. 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 decide the optimal amount of money to save for an emergency fund, potential investment options that can be safe, liquid, and accessible while giving you the greatest possible returns. [02:09] Managing Emergency Cash – Why it’s crucial for everyone to set aside some emergency funds and why it’s important to keep your emergency 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 - Grant shares his take on why it’s a better idea to have your emergency savings as investments rather than cash lying around and the key characteristics of an ideal investment method for an emergency fund. [12:17] CD Ladder & High Yield Savings – How you can make the best of your emergency cash by using multiple Certificates of Deposit and how to take advantage of high yield savings accounts. [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 related to money market funds led to the creation of two separate types of money market funds, the differences between the two types, and what you should keep in mind about parking your emergency cash in one of the two types. [28:24] Government Funds – The feasibility of parking your emergency cash in government funds and how you can utilize multiple methods of investments to avoid the disadvantages of using only one method of investment. 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