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Ling Jit Thong
31 Aug 2020
Dentistry at NUS
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You should always have emergency funds and basic insurance before you invest. That is because investment is for the long run and you do not want to touch these funds until much later which can be 10 to 20 years or more. If something unpredictable were to happen, you will need money and you will be tempted to use your investments. The investments might not be providing the best returns when you are needing it.
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Hey Geoffrey. If you do not have emergency funds for 6 months, saving first will be the less risky path to protect yourself in any case of downtime. Invest if you have are comfortable in suffering some losses or have excess cash to grow your money for a certain thing you want to buy in the coming future
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Perhaps the most crucial question is why - why do you need emergency savings? Why do you need investment?
Then, prioritise. The reasons why you need emergency savings Vs the reasons why you need investment. Which is more important, and which is more urgent?
We should also do a test should the best scenarios don't happen. Would the way you plan be able to withstand it?
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Chan Ze Ming
27 Aug 2020
Accountancy and Finance Student at Nanyang Polytechnic
Hello Geoffrey,
It depends on your job, fixed expenses and most definitely your lifestyle.
If you ...
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You should definitely have an emergency funds. The nature of stocks is that as long as you do not close your position, you have not lost money. Therefore, an emergency funds gives you the confidence to hold your position until the market recovers. Without an emergency fund, you will not have a good night's sleep.