Why You Must Build An Emergency Fund Now To Protect Your Retirement
Over the last few weeks, I’ve warned you to remain cautious with your retirement portfolio even though the economic train seems to be picking up speed into this recovery.
Today, I want to give you another tip you can start today…
Build an emergency fund.
Typically, I recommend people build an emergency fund that will cover 3 to 6 months of expenses.
This amount should cover your total expenses – house, rent, car, phones, internet, food, etc. other things you use every day.
This gives you security and peace of mind because only 39% of all Americans have more than $1,000 in an emergency fund as of January 2021.
This means when – and these things always happen at the worst time – something comes up like an unexpected car repair, medical bill, home maintenance, etc. that they’d have to pay for these things with a credit card, loan, or go without.
Its even more dire for retirees.
When something happens like this for retirees, they often must take money out of their retirement fund to pay for these kinds of things… Or again, go without.
This not only lowers the money you have for retirement now… But it also means you have less money in the future… Which means you may have to go back to work in your 70’s and 80’s like an estimated 15%+ of retirees are now having to do due to Covid.
Plus, it lowers the rate of return and compounding on your investments if you must take money out for these kinds of emergencies as well.
This is like a triple whammy to your retirement portfolio… But if you have an emergency fund, it can protect you from all this.
Start building your emergency fund today even if its only adding an extra $25 into your emergency fund account.
That’s $25 more you can keep compounding in your retirement portfolio.
Plus, the more money you save in an emergency fund, the more money you can keep in your retirement account to buy great stocks at cheap prices when the market does crash.
With all the risks out there right now that I’ve told you about the last few weeks…
- Record debt levels
- Sky high market valuations
- Unemployment is still high
- Covid cases are jumping again – especially in India which just saw a world record 350,000 new cases in a single day – and hospitals in India are running out of oxygen.
- Interest rates rising
- And on and on.
If you want to see our tip from yesterday on why you need to avoid bonds in your retirement account click here.
Also make sure you’re invested in great stocks that have the following traits…
- They’re cheap.
- They have little to no debt compared to a lot of cash.
- They produce large profits and cash flows.
- And make sure they aren’t in industries that could be hammered by Covid.
These kinds of stocks – the ones I try to find for you every day – are things you should continue investing in because they will provide you good to great returns no matter what the market is doing.
All while protecting you from the major risks like valuation, unemployment, debt, and inflation.
These are the kinds of stocks I show you every day – either ones to buy or ones to avoid.
Make sure to check out some of the great potential stocks I’ve already written about below to further protect your portfolio.
Your guide to financial freedom and achieving your retirement goals.
Always in your service,
Publisher Stock Market Daily
P.S. We’re looking for even more ways to help you during these uncertain times. Take the short 3 question survey below to help us figure out what you care most about when it comes to your retirement portfolio.
P.P.S. Do You Have An Emergency Fund With 3 to 6 Months Of Expenses Covered?