An emergency fund is vital as we discussed in Episode 64. But we define that a bit differently than a lot of people.   You should not have a savings account.  You need a checking account that contains one month’s expenses plus 150%.

So if you spend $2000 a month, your checking account should contain $5000.  In lieu of a savings account which makes less than 1% interest, you should use a tool like Betterment to stash your emergency fund.  The money here will grow at an average of 7% a year and is liquid within a few days.  This is controversial to some but it is not risky.  This account should be funded up to $25,000.

Should you participate in your company’s 401K?  Never turn down free money. If your company matches, you should contribute the same amount into a 401K even if you have credit card debt.

Now things are a bit more comfortable.  Between your checking account and investment account, you have about $30,000.  This is your working capital.  We’re comfy now but it’s no time to get complacent.  We’re going to take a little risk by investing in something like individual stocks or a fund with a company like Vanguard or Fidelity.

The next step is for advanced investors with $100,000 or more invested.  You can afford a little more risk.  Andrew has had very good returns with Lending Club.  Not for the faint of heart but the rewards can be enormous.

Don’t forget, we’ve also put together a list of the top vanguard funds we know about – you should check them out!

Now go out and be the best investor you can be!

Show Notes

The Ultimate Investment Strategy Blueprint:  Andrew’s recent blog article.

Vanguard: A low fee investment management company.

Betterment:  Where your emergency fund should be stored.  Use this link and get six months free investing!

Nominate our Podcast for a FinCon Spotlight Award: We all know someone in the FinCon Community or beyond that is doing interesting, far-reaching work to help people with their money.

Learn more about your ad choices. Visit megaphone.fm/adchoices