Property reserves and personal efund locations

[Nilusha Jayasinghe]

Hey all, I'm a smalltime investor currently living in a flat of a Chicago 2-flat while renting the other out, and also have a SFH rental in OH. I'm not looking to scale anytime soon. I have my personal emergency fund stored away in a HYSA, and am working to build up a15k property reserve as well, but am conflicted on where to keep that 15k. We don't have kids (might in the future), my husband and I are young and healthy, have stable high-income full-time jobs, and just put in a lot of work to both properties so don't expect huge expenses in the near future. Both properties are in A areas with great tenants. I know that the general guidance is that emergency funds aren't to be invested, but given our financial security and the fact that we already have a personal e-fund in a safe, non-volatile location, would it still be crazy/unwise to invest this 15k in an S&P500 index fund in a brokerage?

I've looked through the forums and can't find answers to a question similar to mine so I thought I'd post. Would love to know your thoughts and hear if anyone does anything similar with their personal vs property funds. Thanks in advance! 

[Crystal Smith]

Quote from @Nilusha Jayasinghe:

Hey all, I'm a smalltime investor currently living in a flat of a Chicago 2-flat while renting the other out, and also have a SFH rental in OH. I'm not looking to scale anytime soon. I have my personal emergency fund stored away in a HYSA, and am working to build up a15k property reserve as well, but am conflicted on where to keep that 15k. We don't have kids (might in the future), my husband and I are young and healthy, have stable high-income full-time jobs, and just put in a lot of work to both properties so don't expect huge expenses in the near future. Both properties are in A areas with great tenants. I know that the general guidance is that emergency funds aren't to be invested, but given our financial security and the fact that we already have a personal e-fund in a safe, non-volatile location, would it still be crazy/unwise to invest this 15k in an S&P500 index fund in a brokerage?

I've looked through the forums and can't find answers to a question similar to mine so I thought I'd post. Would love to know your thoughts and hear if anyone does anything similar with their personal vs property funds. Thanks in advance! 

This is a great question.  An emergency fund needs to be liquid, and immediately available to you in addition to being low risk and protecting principle.  For these reasons, we don't invest our emergency funds in anything that has volatility and we can't write a check against it the same day for an emergency. I don't like the returns but we use regular savings accounts.  The returns suck at a little over 3% per annum but we deal with it. 

Another idea that we have been exploring is using the cash value of whole life insurance funds for emergencies.  We'll only do it if we can access the funds immediately.