Fri Mar 14 2025, by Tyler Gardner

3 Reasons Why I Would Never Create an Emergency Fund

Here are three reasons why I would never create an emergency fund.

1. Opportunity Cost of Wealth Generation

First and foremost, it kills my ability to generate long-term wealth. A typical emergency fund sits in a savings account earning around 1-2%, whereas a typical stock market fund earns about 7-8%. Over 30 years, this disparity could lead to the loss of literally hundreds of thousands of dollars in potential gains.

2. Questioning the Emergency Scenario

Secondly, what Armageddon scenario are we really discussing here? A job loss coinciding with a car repair, a health crisis, and all your assets suddenly falling to an all-time low? It sounds like the true emergency is that we didn't allocate your assets more effectively across various asset classes to avoid having them all plummet at once.

3. Alternative Support Structures

Finally, if it did magically hit the fan all at once, A) we’d likely face bigger problems, like aliens heading to Earth, and B) most emergency scenarios come with delayed payment plans for those needing assistance, without destroying your credit or incurring massive fees. The only true emergency we face is your money not working as hard as it can for you, for as long as it can.

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