Well, basically this is very important that having an emergency fund is very important for a Invest. When you invest in Bitcoin at a fixed price and then if the market falls, you can use that emergency fund for any necessary purpose. It is important to collect an emergency fund before buying Bitcoin, it will always be a good plan for yourself and it can benefit the investor in any bad time. I think such a plan would be a good step for real investors where they invest according to a percentage, save some percentage and leave some for an emergency fund. Many times this emergency fund is very useful to deal with emergencies, every person should have such an emergency fund plan that will always benefit them.
It is never a good idea to use an emergency fund after a market crash. What you mean is that an emergency fund is for you to buy aggressively when the market crashes, but this is a complete misconception. Because an emergency fund is there to protect your investments. For example, in the event of an unexpected financial disaster, you do not have to sell your holdings, so that you can take money from your emergency fund to deal with the financial disaster. Or if someone gets sick and you have no other money except the emergency fund for treatment. Then you can take money from the emergency fund at that time. It is not right to rely on the emergency fund all the time.
When you do not have any money except the emergency fund, you can take money from the emergency fund.
It depends on the size of your emergency fund. If you have a sufficient emergency fund, say oneyear or more, you can increase your holdings by aggressively buying during a market dumping.[/b] I am not completely dismissing the idea of @out of mind. An important element of making an emergency fund a long-term investment is that the longer you hold it, the safer your Bitcoin holdings will be in the long term.
To put it more clearly, let's say if you have one-year emergency fund and have no source of income or in that case if you lose your job. Or someone in your family needs medical treatment, you can use that fund without withdrawing the Bitcoin holdings.
Now the question may be how much of your emergency fund you have to spend on emergencies. This depends on how much your medical expenses will be if you get a job again.
Continuing aggressive buying from your excess emergency fund may be the right decision, depending on how much floating cash you have.
Usually guys are not going to be saving up 1 years worth of expenses in emergency funds.. that is not a good use of money... that is why we usually will suggest 3 months of emergency funds and then any excess would be in reserve funds and so reserve funds have more flexibility since they can be used for emergency and they can be used for various other purposes.. if you are getting down to ONLY having 3 months remaining in your back up funds, that is likely at an emergency level to be at such a status, especially if you might be wanting to protect any investment that you have, such as bitcoin.
In the end you can call these various kinds of back up funds whatever you like, yet part of the reason to categorize them in terms of emergency funds, reserve funds and float is in order to help to guys to conceptualize the difference. .and perhaps how much of a cushion to have also depends on the anticipated income and expenses that a guy has. If a guy has a very erratic income and/or very erratic expenses then he likely has to hold more back up funds, and those likely would not be emergency funds since he already knows that he has erratic income/expenses, so he has to keep extra money on hand just to deal with his income/expenses that he already knows to be erratic... but yeah, he can call them anything that he likes, but it seems that if he already knows about his own erratic income/expenses has to prepare in advance otherwise he is putting himself into emergency situations for situations that are not actual emergencies, and he is nearly creating his own emergencies by his lack of proper preparedness, so guys surely should want to be in a balanced situation where they aren't having emergencies... but they also likely don't need to have 1 year's worth of cash on hand, either.. .that seems excessive.
Yeah, you actually broke it down really well. I like how you separated emergency funds from reserve funds and float, that alone makes it easier to think straight about money instead of just saving blindly.
And honestly, you are right, saving up a full year of expenses in cash sounds good in theory but doesn’t really make sense for most people. That is just money sitting there doing nothing, especially in this time.
The part that really hit me was what you said about guys with unstable income or spending habits, like yeah, that is not even an emergency anymore, that is just your reality. So you gotta plan for it ahead of time or will basically creating your own problems.
This kind of thinking is what more people need. Simple, practical, and balanced not fear based. Just being real with your situation and planning smart.