What would you consider as an investment vehicle for your emergency fund? If you were able to put money into an emergency fund to meet an unforeseen event or money squeeze, what would be the best investment? Do you think a simple savings account would be adequate or would you look at something potentially riskier?

An emergency fund should not be invested. It should be somewhere safe, beyond risk of any kind, and readily accessible in instances when a quick departure is called for. You might say in an FDIC insured savings account unless you were around for the Savings and Loan crisis of the 1980s when over 700 US savings institutions failed and the FSLIC became insolvent trying to make good on its deposit insurance. Then the FDIC stepped in and assumed that liability but told depositors that they did not know when their money would be refunded and that any refunds would certainly not include interest. One elderly woman I knew at the time was told by an FDIC representative that their insurance allows up to 99 years to repay any depositor. In the off-chance said representative could have made good on that assertion, I would say a mattress would be as good a spot as any. (Alright, that may seem a little alarmist, but you catch my drift …:)

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