DAVE RAMSEY

Dave Ramsey says: Emergency fund is protection rather than investment

Dec 11, 2018, 11:30 AM

Dear Dave,

One of my friends suggested that I put my emergency fund money into bonds. What do you think of this idea?

— Renee

Dear Renee,

Never put your emergency fund into things where volatility and risk are a concern.

An emergency fund isn’t an investment; it’s three to six months of expenses set aside to help protect you from the unexpected things life will throw at you.

My advice is to keep your emergency fund in something simple like a money market account, where there’s no penalty for early withdrawal and check writing privileges for easy access.

Bond values and prices go down when long-term interest rates rise.

Right now, long-term interest rates—a good example would be mortgage rates—are ticking up. So, as this happens, the value of bonds goes down.

We’re not looking to make money with an emergency fund, Renee. Think of it as a type of insurance.

Just let it sit there, safe and sound, until it’s needed!

— Dave

Dave Ramsey

(Pexels Photo)...
Dave Ramsey

Dave Ramsey says: It’ll take lots of discussion and planning to run a business

Everyone wants to be successful in their job, enjoy what they do and make lots of money, but personal happiness is just as important.
2 days ago
(Pexels Photo)...
Ken Coleman

How to identify and handle hostility in the workplace

A hostile workplace can curtail your career and your mental health. Learn how to handle hostility in the workplace.
4 days ago
(Unsplash Photo)...
Dave Ramsey

Dave Ramsey says: Be honest in uncomfortable situation explaining better job offer

When handed a great opportunity shortly after starting a job elsewhere, walk into your boss’s office and lay out the whole situation truthfully.
9 days ago
(Pexels Photo)...
George Kamel

How to manage finances with inflation through the rest of this year

Whether we want to admit it or not, inflation is here, and there’s plenty of ways you can beat it through the end of the year.
11 days ago
(Flickr Photo/TaxRabate.org.uk)...
Dave Ramsey

Dave Ramsey says: Pay off credit debt, then keep rolling to straighten finances

When the rule of paying off debts from smallest to largest doesn’t apply, attack the one with the larger interest rate first.
16 days ago
(Unsplash Photo)...
Kristina Ellis

Here are 3 easy ways high school seniors can increase their productivity

If you're a high school senior, it’s so important to get your priorities set and get your life organized as you start this academic year.
18 days ago

Sponsored Articles

...
Children’s Cancer Network

Children’s Cancer Network celebrates cancer-fighting superheroes, raises funds during September’s Childhood Cancer Awareness Month

Jace Hyduchak was like most other kids in his kindergarten class: He loved to play basketball, dress up like his favorite superheroes and jump as high as his pint-sized body would take him on his backyard trampoline.
...
SCHWARTZ LASER EYE CENTER

Key dates for Arizona sports fans to look forward to this fall

Fall brings new beginnings in different ways for Arizona’s professional sports teams like the Cardinals and Coyotes.
...
Day & Night Air Conditioning, Heating and Plumbing

Ways to prevent clogged drains and what to do if you’re too late

While there are a variety of ways to prevent clogged drains, it's equally as important to know what to do when you're already too late.
Dave Ramsey says: Emergency fund is protection rather than investment