Where to Keep Emergency Fund
The fund must be safe and instantly accessible. You are not trying to maximize returns; you are trying to guarantee the money is there.
- High-yield savings account (HYSA): easy access, modest interest, FDIC insured.
- Money market account: similar safety, sometimes with limited checks or transfers.
- Cash: only a small portion; inflation erodes it and it is risky to hold large sums.
Avoid locking it in CDs with early-withdrawal penalties or tying it to investments you might have to sell at a loss.