I just checked in on my $5,000 emergency fund and saw my monthly interest payment—a whopping $3.13. It’s not going to save me from financial ruin exactly, but as my grandfather would say, I guess it’s better than a stick in the eye.
Normally, as a financial planner, I would encourage you not to let a little number like that keep you up at night. Your emergency fund is the one place where it’s more important to preserve your cash (in case of an emergency, duh) rather than try to grow it. There are 401ks, Roth IRAs, and brokerage accounts for that.
However, there’s been a lot of buzz lately about “making money off your emergency fund,” so let’s explore this further.
What are your options, and what’s the risk associated with them?