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The fund that protects the plan

Portfolio & Risk

Three to six months, boring and liquid

An emergency fund is not an investment — it is what stops a broken car from forcing you to sell shares in a bad month. Held in cash, deliberately dull. It is the least exciting part of a plan and the part that most often decides whether the plan survives contact with real life.

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An emergency fund's purpose is to…

  1. Earn a high return
  2. Stop life events from forcing you to sell at the worst time correct
  3. Time market entries

It protects the portfolio from your circumstances. That is worth more than the return it forgoes.

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