Is it a good strategy to use your investment account as your emergency savings account? Good afternoon everyone and welcome back to Finance Friday. The question of the week comes from K.G. K.G. asks
“ My advisor keeps telling me to keep money in a savings account for emergency purposes. However, its in a savings account earning less than 1%. Are investment accounts a good idea to use for emergencies?”
Well, KG, let me begin by saying that everyone’s savings strategy is unique and will differ depending on a few factors. Having an emergency account can be difficult to maintain, however its necessary to have. According to a survey done in January of 2025, about 41% of people living in the U.S. said they would be able to tap into their savings to cover an unexpected $1,000 expense. This means that 59% cannot.
While a savings account traditionally does not yield a large return, it can provide the liquidity in funds that one needs for an emergency. Other people have designated a credit card or line of credit as their emergency account. In these cases, they have the liquidity and the option to pay the money back later. The important thing to remember is to pay off the balance before being charged a finance rate fee. I think that you should speak with your advisor and let them know your concern about the return that you receive on the savings account so that they can plan a more suitable strategy for you.
Now it’s your turn. What strategy do you use to plan for an emergency? Please send me your answers and any additional questions to hector@hrcfin.com. Don’t forget to follow HRC Financial on Facebook and LinkedIn for more Finance Friday discussions.
Thank you again everyone, have a great weekend and to my Texan clients and friends, Happy Go Texan Day!