Saving & Emergency FundsIntermediate4 min read
Short-term savings vs. long-term savings
Different goals need different vehicles. Here's the map.
Not all saving is the same. Money you need in 6 months behaves very differently from money you need in 30 years, and you should hold them in different places. The biggest mistake is to treat all savings as one bucket.
The time-horizon ladder
- 0–1 year: cash only. HYSA, money market, or short T-bills. You need it liquid and safe.
- 1–3 years: mostly cash, maybe some short-term bond funds or I-bonds. No stocks.
- 3–5 years: a blended portfolio — some stocks, some bonds, some cash. This is the murky middle.
- 5–10 years: mostly stocks, some bonds. Growth matters more than stability.
- 10+ years: stocks, broadly diversified. Short-term volatility doesn't matter.
The big mistake
Putting your down payment money (needed in 2 years) into the stock market because the HYSA rate feels low. A 25% drawdown right before you need it is a catastrophe a HYSA would have prevented.
Put this into practice
Worth tracks your accounts, budgets, and goals — so the concepts in this article aren't just theory.
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