Question about using a robo-advisor for my emergency fund

I put $5,000 into a robo-advisor's 'conservative' portfolio for my emergency fund last year, and a market dip last month dropped the value by almost $400 right when I needed to tap it for a car repair, which taught me that even 'low risk' investing isn't the same as cash for emergencies.

2 comments

2 Comments

morgan.cameron9d agoTop Commenter

Wait, you put your actual emergency fund into the stock market? Even a conservative portfolio can drop when you need cash the most, that's why they tell you to keep that money in a savings account. Did the fine print on the robo-advisor say it was safe for money you might need tomorrow?

luna_wells579d ago

A high yield savings account loses to inflation every single year. My robo advisor keeps a chunk in bonds and cash equivalents, the overall return beats a bank account even with some risk. The key is having a bigger buffer than the bare minimum emergency fund.