Is it okay to put your emergency fund in stock market? At some point in your life when you want to increase the value of your money, you would ask this question just like some investors. Emergency funds are the money that’s supposedly allocated for you and your family in case something urgent comes up. Imagine the situation if you decided to put the money in stock market without any back up for emergencies, are you going to survive the tough times? Will you be able to withdraw the same amount of money from your stock investment? If you can’t find the right answer to this, I am about to share with you my top 3 reasons why you shouldn’t put your emergency funds in stock market.
Catch me in my live training events! (quick plug)
The heart of why I do this seminars is I want to build a generation of Filipinos with the right foundation in stock investing. I want to bring smart investing to every Filipino around the world! If you would like to know more on how you could time the market checkout the trainings below.
Stock Smarts Cebu — April 6 & 7, 2019
Investing Insights Japan – April 13, 2019
Stock Smarts Singapore — May 18 & 19, 2019
Investment Conference 2019 – May 25, 2019
Stock Smarts Manila — June 15, 16, 22, 23, & 29, 2019
Stock Smarts Iloilo – July 6 & 7, 2019
Stock Smarts Cagayan De Oro – July 20 & 21, 2019
Stock Smarts Hong Kong – August 11, 2019
Stock Smarts UAE – August 30 – September 3, 2019
Stock Smarts Qatar — October 3 – 6, 2019
Stock Smarts Taiwan – November 2, 2019
The name describes itself already– emergency funds are for emergencies only! Think of the reason why you establish a certain kind of fund. Isn’t it something you can use in the future when someone from your family gets hospitalized? When you lose your job unexpectedly? When you need immediate funds for your business? One good thing about emergency funds is that you can always withdraw it anytime from your bank account when the urge to use it comes in. If you are stuck between putting it into the stock market and letting it sit in your account, think of your reasons why.
One reason why you should not put your emergency funds in stock market is the volatility of the market. The price of stocks is not constant. There are ups and downs in the market. You will experience this once you start investing. Imagine what would be the situation when you put your emergency fund in stocks. What if the market is down and you need to withdraw the money for emergency? The tendency is you won’t be able to get the same amount of money. It’s either you withdraw your funds below it’s original value or wait for the market to bounce back so you can get the same amount you invested.
Time is relevant in this situation. If it’s your goal to earn and increase your emergency funds through stock investing, you should be able to understand that it would take some time to yield. Your emergency funds won’t profit if you invest it today and withdraw it the next month. It doesn’t work like that. If you are eager to put your emergency funds in stocks, prepare your patience and time to learn how the stock market works.