Friends! Good to see you again. Are we all ready for Thanksgiving? Good, me neither.
If you're new to the series, this is Ashley Asks a Question where I, the financial novice at Wela (don't worry I just handle the marketing), ask our COO Eddie and question that's burning on my mind about my money. Let's get to it.
Where's the best place to keep my emergency reserve so it can grow? Right now it's just sitting in a savings account doing nothing.
This is a great question and one that we get a lot. Unfortunately the answer is to keep it right where you have it now. Your emergency fund needs to be 100% risk-free and 100% liquid/accessible. Almost like cash under you mattress (although we recommend to keep it at the bank).
The thing is, we're in a very low interest rate environment. This is great when you go to borrow money for a house or a car, but not so great when it comes to your savings account. Many savings accounts used to pay much higher interest rates but our cost of borrowing was also higher. So we have to take the good with the bad.
Bottom line: The Emergency Fund needs to be kept totally liquid and totally safe because you have no idea when you'll need access to it. So put it in
your mattress a savings account.