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6 months is the conventional wisdom for what that is always worth. I believe the emergency fund should be the household expenses over the period of time it would take you to find a new job. But certainly, the expenses can be typical expenses or necessary expenses. The latter is always far more. Further, if you are quite secure in your job you can probably go with less of a cushion.

Historically, there has never been a bad time to buy stocks. Never rush to buy them and never use any money you might ever need.

I would definitely put the first 3 months of any fund into a money market account at a well secured instituition. Beyond that you could certainly put funds above 3 months in expenses in a 3 month CD. Or a short term bond fund (the stb fund is much more liquid). Investing the emergency fund in any stock or long term bond product is just fooling yourself.

If you feel you need to "be in the market" and are secure in your jobs then maybe you should put 3 months away and start an automatic withdrawal for $100-$300 a month into that account. Don't stop the auto withdrawal until you get to 6 months or whatever point you think appropriate.

Patrick

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