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>>Look at some equity indexes, QQQ, SPY etc.

I would also add XLK to the list. The Amex web site has a description. It is like SPY, but only technology stocks.

>>Three to six months of living expenses in cash.

It really depends on your investments. For instance, I have two margin accounts with check-writing at two brokerages. I keep the margin I use for trading to a very low level, and therefore can use the check writing capability as an emergency fund. I keep about two weeks of pay in a savings account and the rest is working in the market for me.

If I ever need the emergency fund I can get at it right away, night, weekend, etc. The interest rate is very low about 8% now. I have been doing this for several years and I figure the money I have made keeping it all in the market has more than made up for any interest I might have to pay someday for an emergency withdrawal.

The thing that makes it work for me is to look at what might happen if the market went down 40% and would I still be able to take 6 months expenses out. If the answer is yes, put your money to work for you.

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