Rainy day fund
I had always been taught to keep some cash in case of emergencies but I think the math doesn’t agree. I’m not talking about have an extra $5k in your chequing account to keep your account above a min balance. Im talking about the maybe 20k you keep in cash in case you lose your job or total your car.
Any cash that’s just sitting there is basically lost opportunity right? Interest is taxable so it’s pretty much laughable. Meanwhile if you hold any kind of debt including mortgage, you’re essentially paying interest on that cash sitting there.
That’s why the Manulife one account and similar products boast sooner financial freedom.
The most optimum thing to do is to put all your spare cash against debt and mortgage and have LOCs available for when you need it.
Anyways, I’m just wondering if anyone else keeps a large sum of money as a rainy day fund and why.
Ive float anywhere between 20k to 50k cash but that’s a pool for 2.5 families. I still think it’s a bit high. 20k makes me a little nervous at times.