What is the right amount to keep in a savings account for emergencies?

You know the dilemma: in an emergency, you need your money fast. A savings account gives you pretty quick access to your money.

But a savings account also earns low interest. So if you put too much in there you diminish your earnings.

I've heard all kinds of conflicing advice. What do you think?

How many months' net income do you think one should keep in a savings account for emergencies?

I'd say a realistic emergency fund should be around 1000 – 3000 dollars. Any less than a grand and you run the risk of having to tap into illiquid assets or lines of credit any more than 3k and you are giving too much opportunity for your money to grow.

the general rules that i follow as far as savings:
emergency fund – 3k in on-line savings account look at HSBCDirect @ 4.5%
unemployment fund – 2 months salary 50-50 stock and bond funds you want to minimize volatility so look for a mean efficent portfolio (look for a MVO optimizer to help)
every month:
first maximize your 401k – regardless of what popular rules of thumbs i think you would be hard pressed to beat 100% stock funds over the long haul.
once all that is taken care of then tackle roth IRA and 529s for kids.

thanks
george
cheif technology officer

http://www.doodlebugdezigns.com