Choose wisely. There is only one correct answer to each question.
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1.
Why are stocks not considered a good parking place for emergency funds?
The stock market is volatile. It is possible for the price of your stock to be down when you need the money to cover an emergency expense.
2.
You will likely need an emergency fund most when you're not financially stable.
True. People who are just starting out are usually most in need of such a fund.
3.
When starting an emergency cash fund, it's always best to start with a high amount.
False. If you don't get a windfall, you can set aside a comfortable amount, such as 5%. You can always add to it later.
4.
Where is the best place to keep an emergency cash fund?
Keep your emergency cash fund in a savings account or money market account. These types of accounts are the most accessible in case of an emergency.
5.
Should you ever consider adding additional money to your emergency cash fund?
Yes. If you receive a bonus or raise at work, you should try to add money to your emergency cash fund, before you get used to spending the extra money. You might also consider looking for ways to trim your monthly spending, in order to add to your emergency cash fund.
