What's an emergency?tadamsmar wrote: ↑Wed Mar 07, 2018 8:19 amWhat about an emergency fund? It's not really cash waiting to be spent.
https://thelawdictionary.org/emergency/What is EMERGENCY?
Situation requiring immediate attention and remedial action. Involves injury, loss of life, damage to the property, or catastrophic interference with the normal activities. A sudden, unexpected, or impending situation.
The key words here are catastrophic and unexpected. There is no good reason to have a huge pile of cash around for an unexpected event. It may happen tomorrow, or it may happen ten years from now or it may never happen at all.
We should all be willing to take some risk to be able to respond to an event that may never happen. Do you have a deductible on your car insurance? The higher the deductible the lower the cost. The same concept should apply to our emergency fund. It need not be and probably shouldn't be cash but some other asset that is easily converted to cash even at some cost. Think of the cost of having to sell say your 2 yr Treasury at a loss. The loss is the deductible in your insurance policy.