Our Emergency Fund goal is intended to help you save and invest funds that can be used for a future emergency or unexpected expense. As a general rule of thumb, your Emergency Fund should contain enough money to cover your basic expenses for a minimum of 3 months. While we never recommend going
below 3 months, it may be appropriate to have a larger Emergency Fund depending on your situation or preference.
We recommend keeping your emergency fund in one of two places: cash - more specifically a low-risk, high-yield cash account - or a bond-heavy investing account.
● A low-risk, high-yield cash account like our Cash Reserve may not always keep pace with inflation, but it comes with no fees, no minimum balances, and no investment risk.
● An investing account is better suited to keep up with inflation but is relatively riskier. Because of this volatility, we suggest adding a 30% buffer to your emergency fund’s target amount. There also may be tax implications should you withdraw funds.
For more information on how you can build your Emergency Fund, please click here.
For Cash Reserve (“CR”), Betterment LLC only receives compensation from our program banks; Betterment LLC and Betterment Securities do not charge fees on your CR balance.