Where should I put my rainy-day fund?
08 July 2021
Question by Lydia
Where should you store your 'rainy day' buffer funds?
With interest lower than inflation is it better to invest it in an easy access account?
Answered by Martin Ruskin
Notwithstanding really low interest rates, the best place to keep ‘rainy day’ money is still in a savings account, either instant or perhaps a 30 day notice account. It is also to quantify how much should be ‘rainy day’. Most advisers would recommend between 3 to 6 months expenditure and I would add up to 2yrs potential capital expenditure (for holidays and home improvements, for example).
Historically, even when interest rates have been higher than today, inflation has been higher still, so holding too much cash always comes with the wealth warning that its real value is going backwards every day.