Then you're just making AA ratio an arbitrary number. What's the difference between 80/20 and 75/25 to your personal situation?Old_Dollar wrote: ↑Mon May 20, 2019 6:52 pmIn the case of an emergency fund the special "money jar" is often a high-yield savings account, money market account, etc.
Is there any reason why someone shouldn't just revisit their risk tolerance and redirect the emergency fund to that allocation in a brokerage account? For example, a portfolio that is 80/20 with an emergency fund in a money market account becomes a 75/25 portfolio with the emergency fund fully invested in the portfolio.
Start with your goal and your personal situation. Then see if it calls for a 2 year of living expenses set aside in cash or cash equivalent?
- For most people who have sizable taxable brokerage account, they can get the money whenever they need it.
- For most of those people in this group, they can also cash flow unexpected expenses (unless it's a huge bill).
- And if they have stable job, the need for 2 year of living expenses during their accumulation phase is non-existence.
In the grand scheme, the lost of opportunity cost for EF is immaterial. So whether you do have EF or you don't, it just doesn't matter much.