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Updated 2mo ago.
Updated 2mo ago.
An emergency fund is a readily accessible cash reserve, equal to 3 to 6 months of essential expenses, meant to cover unexpected events (job loss, urgent repairs, medical costs). It should be kept separate from your investments and remain liquid.
Your essential monthly expenses are $3,000 (rent, groceries, transportation, insurance). An adequate emergency fund would be between $9,000 and $18,000. Keep it in a high-interest savings account (HISA) like those offered by EQ Bank, Wealthsimple, or Tangerine, ideally inside your TFSA to avoid tax on the interest.
Without an emergency fund, an unexpected event forces you to sell your investments — potentially at a loss and at the worst time. It's the foundation of any financial strategy. Build your emergency fund BEFORE you start investing in ETFs.