Should I eat into my emergency fund to buy stocks on sale?

The market seems to be wanting to stay low for a few more days at least. Asia and Europe were down yesterday, and apparently the “mixed” unemployment results in the US sent the national markets down as well.

Financial Samurai’s “game plan” is to invest a portion his cash every time the market goes down an additional 2%. I like this strategy: without wanting to “time” the market, when stocks are going significantly down, it sounds like a good idea to buy, as long as you are still in your accumulating phase. Of course, Financial Samurai plans his stuff a bit better than me, and he actually has some cash lying around to do this. I don’t. I invest everything I can as soon as my paycheck hits my bank account.

Today I made a pretty bold decision: I decided to eat into our emergency fund to buy a few more ETF shares.

Now, let me be clear: I, in general, don’t believe too much in the “emergency fund”. Our lives are pretty stable and I don’t picture myself being fired within the next 30 days. I also have income from my side gig, so worst case scenario I can cover for a “significant” portion of our monthly needs with the side gig alone. This means I don’t have much cash lying around. That being said, just in case, I have roughly the equivalent of 1 month of expenses in my bank account, in addition to what we usually plan to spend. I rebalance those numbers at the end of each month: if we used more than planned, we ate into the emergency fund, therefore I invest a bit less in order to refill the emergency fund. If we had a frugal month, it just means I can invest a bit more the month after that.

I decided to take half of our emergency fund and buy shares with that. If something bad happens this month, it puts us at “risk”. I’d have to sell some of my shares low. So it’s probably not the best idea. But I also feel I shouldn’t be missing on the opportunity given how low the markets are right now.

Because of labor day, the cash (transferred from my checking account) will actually reach my brokerage account on Tuesday, so I still have time to re-think the decision here.

what’s your “game plan” when investing? Are you trying to buy stocks “on sale” right now? Where do you take the additional money from?


  1. Bryan @ Just One More Year
  2. Carl
    • StockBeard

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