Thanks to a really illuminating answer given by our advisor, Kimberly J. Howard, we can tell you about the best place to park your emergency dollars.
As she says, “the best place for those dollars is in a CD (certificate of deposit), savings account or a money market account.”
This is because any investments need to be safe and risk free, while also allowing easy and quick access.
CDs are insured by the Federal Deposit Insurance Corporation for banks and by the National Credit Union Administration for credit unions, which means that they are “money in the bank” – they are insured by the government and risk-free.
Money market accounts, for their part, invest in government and corporate securities and pay the depositor interest based on current interest rates in the money markets.
All three are highly liquid, meaning that getting to your money is a very easy process in case of emergency.
All three are also extremely safe, meaning that no matter what is going on in the world, you’ll be able to get to your emergency funds and ride out the storm – hopefully protecting your long-term investments in the process