How crazy is it to invest an emergency fund in stocks?

I thought I had written everything I wanted to write about emergency funds. Especially why I don’t like them! For example:

But this topic just keeps coming back. Most recently in the ChooseFI podcast episode 66 and the discussion that ensued afterward. One unresolved issue: the pros and cons of investing the emergency fund in the stock market. As I’ve mentioned before, I am not against having an emergency fund. Quite the contrary, if you’re on your path to Financial Independence (FI) you strive to accumulate 25 years (!) (or better 30+ years) of expenses – much more than the 3-6 or even 8 months of living expenses normally recommended to keep in the emergency fund. In other words, I view our entire portfolio as one giant emergency fund invested in productive assets (mostly equity index funds) and I don’t see the need for keeping a separate bucket of money in low-risk assets. One could view this as having an emergency fund that’s invested in stocks! 100%! How crazy and/or how irresponsible is that? That’s the topic for today’s post. Let’s look at the numbers and quantify the tradeoffs…

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Our Net Worth as of 3/31/2018

I wish the first quarter had ended on January 26 when the S&P500 peak reached the all-time high of 2,872! But in the end, the first quarter of 2018 was really nothing to write home about. And the second quarter is off to a volatile start as well! But I started with this series exactly a year ago and I might as well keep going! Besides, looking at the visitor stats, these posts are some of the most popular! I don’t blame you for being nosy because net worth updates are some of my favorites to read on other blogs, too! 🙂 Soooo, where do we stand as of 3/31/2018? Let’s take a look at the cold hard numbers…

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Does Big Ern really exist?

Psssst? Can you read this? I’m not supposed to do this but I secretly logged into the EarlyRetirementNow WordPress account. I’m not Ern! I’m a whistleblower! Big Ern doesn’t actually exist. It’s all a big sham! This blog is created by a Macedonian content farm. We got five people here working around the clock, churning out blog posts, answering emails, commenting on other blogs, writing tweets, posting on Facebook, SEO, you name it! The whole shebang!

Don’t believe me? Ask yourself: have you ever actually met Big Ern? Have you seen him? Yeah, there are some photos on the blog and you heard him on the ChooseFI podcast. But that’s an actor! We found him on Fiverr! And since we’re running things on the cheap we went with some dude who doesn’t even speak proper English. So, we conjured up that whole story about Ern being an immigrant.

How about the financial analysis and the Safe Withdrawal Rate Series? Well, all of that work is indeed legit and original research. But it’s all contract work! With the money we haul in from the blog every month we could buy the entire Finance department at Macedonia National University. So, we just “rent” two assistant professors to help with the simulations! You should see our profit margins!

And back to the Big Ern actor, do you know why he couldn’t come to the FinCon in Dallas in 2017? He has no training in Finance! You talk to him for two minutes and you figure out the guy doesn’t know anything about finance! He wouldn’t know the difference between a Safe Withdrawal Rate and a mortgage rate – he’s an actor for Chrissake! When he doesn’t pose for the pictures on the blog he’s doing clown gigs at kids’ birthday parties in Tulsa, Oklahoma! At least for the upcoming CampFI in April they coached him enough to not make a total clown out of himself. But ask him how the calculations in the SWR Google worksheet work and you’ll see a blank stare! Try it!

But there’s more…

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