Do you have an ICE fund? An ICE fund stands for In Case Of Emergency – it’s the fund that you don’t touch unless there is something seriously wrong going on in your life. In the past, the typical ideal savings fund was about 6 months’ worth of salary. And, in the past, that would have been way more than what a normal person needed. Back in the olden days, people weren’t getting fired left and right, and people weren’t losing their 401(k)’s.
Times have changed. Drastically. And so have the rules.
The new rule when it comes to your rainy day fund is that it should be as big as you can possibly make it. You need to save as much money as you can from month to month, mainly because this economy does not offer the luxury of job security for most jobs. So, you have to make it a secure economy for you.
What most people don’t realize is that there is more than one way to keep your money safe and sound, without having to worry too much about being able to withdraw it. The best way to figure out how to make your money work for you is to figure out which rate of return offers you the most protection.
You have many options when it comes to making your ICE fund grow effortlessly, and each option deserves some looking into. Regular savings accounts, as well as online bank accounts, offer low rates of return, but offer you the ability to withdraw money at any time. At one point, CD’s were a lot more profitable than savings banks, but this isn’t the case anymore. You can also invest your money into more insurance, or into a mutual fund. Setting an appointment with a local financial advisor can help you decide where you should put your money.
There is one bad option (universally) when it comes to investing in your ICE fund. The one place you should not put your ICE money is into risky investments like stocks, which can be a prime reason for your need to dip into emergency funds in the very first place. After all, the key word to emergency money is stability. So if you hear anyone asking you to invest in a high risk item with your emergency fund, RUN!
Meanwhile, just keep socking away money for that rainy day…your wallet will thank you.