A. We have discussed before a few safe options to park your emergency fund.
However, a recent article on Journal of Financial Planning questions the wisdom of all cash emergency fund. It argues that emergency funds invested in a diversified stock/bond portfolio could lead to maximum lifetime value.
That study might not fit people who are not very aggressive. But if you are, in addition to the few safe options we discussed before, you can use a few different perspective to look at some other emergency fund options:
1. Credit card as your emergency fund.
2. Your property's line of credit as your emergency fund (the pay as you go loan).
3. Roth IRA as your emergency fund (you can take out your contribution without penalty).
4. A multi-year guaranteed rate annuity as your emergency fund (this option is for people who really treat emergency fund as emergency use only, don't casually dip into it).
If you want to know more about the last multi-year guaranteed rate annuity option and its current rates, please contact us.