The Hybrid Approach to Emergency Funds

[Suba]

After the savings allocated for an emergency fund have accumulated and reached a target based on a person's personal status, such as a minimum of 6 months for singles, 9 months for marrieds without children, 12 months for marrieds with one child, or 15 months for marrieds with two children, the amount of their monthly expenses is calculated.

According to the Hybrid theory, the accumulated emergency fund is split into two parts: one-third in cash, such as bank savings, and two-thirds in liquid investment instruments, such as blue-chip stocks, Bitcoin, mutual funds, money market funds, bonds, etc., depending on the risk profile.
Do you agree with the Hybrid theory?

 

[mrki444]

I would not have so much savings in investment. Investment is investment. What you invest you should be able lose so don't invest what you can't lose, especially savings.

 

[Suba]

I am discussing the hybrid theory applied to emergency funds, so it is not a personal opinion. According to many financial experts and professional investors, keeping large amounts of money in banks as savings is a loss, because banks often do not provide interest or only provide very small interest.

 

[Springtime]

The hybrid theory sounds good. Putting all money in a savings account can only earn very little interest. Invest in some highly liquid assets makes sense. If you need money, use the savings in your bank account first. If that is not enough, you can always sell your liquid assets.

 

[mrki444]

keeping large amounts of money in banks as savings is a loss, because banks often do not provide interest or only provide very small interest.

I agree with this but then I would not have big savings, than part in investment. Investment part I would not call savings.

 

[Starmix]

That sounds good just the name itself hybrid so it could yield a good return if use it in business and for an emergency fund it's good for the entire family to collaborate to have an excellent amount intended for emergency fund.

 

[Augusta]

This strategy helps ensure funds are readily available when needed while also maximizing returns on a portion of the savings.

 

[mrki444]

Can you make emergency funds just collecting coins? It would take some while but you would not feel it strong on your budget.

 

[Augusta]

Emergency funds should be kept in accounts that offer both liquidity and safety, such as high-yield savings or money market accounts