Cash reserve example

Living in a society which encourages spending, it can be difficult to remember the power of having savings. Cash, however, creates opportunities that spending never can. An emergency cash fund is simply a savings account, and having one in the appropriate amount will change your life for the better.

When something unexpected comes up, your emergency fund protects your other long-term investments.

You use your emergency funds so you don't have to withdraw from a retirement account (like a 401(k) or IRA) and pay early withdrawal penalty taxes, or so you don't have to sell long-term investments (like stock index funds or bond mutual funds) at a bad time.

Cash reserve bank

Also, cash puts you in a position to buy when everyone else wants to sell, allowing you to make money in good and bad times. For this very reason, we encourage people to have an "opportunity fund" as well as an emergency fund.

The opportunity fund is cash set aside that you can use to invest during bad times in the real estate or stock markets. First, you have to build up your emergency fund.

how much cash reserves should i have in retirement

how much reserve money should i have