Začínáme s investováním
Emergency Reserve: How Much to Set Aside Before You Start Investing
Key takeaways
- An emergency reserve is 3–6 months of essential expenses held in an easily accessible account.
- Keep it in a savings account, not in investments — it must be safe and available at all times.
- Without a reserve, a crisis may force you to sell investments at the worst possible moment.
- The right size depends on the stability of your income and your financial commitments.
- Building the reserve is your first goal; only after that should you start investing regularly.
An emergency reserve is 3 to 6 months of essential expenses set aside in an easily accessible account for unexpected situations. It is unglamorous but absolutely fundamental — without it, investing transforms from building wealth into gambling with your nerves.
What the reserve is for
Life can surprise you: job loss, a broken-down car, an unexpected repair, a drop in income for a self-employed person. The reserve is a cushion that absorbs these blows without you having to go into debt or sell investments. It gives you time and clarity to solve the problem with a cool head.
Why a reserve is a prerequisite for calm investing
This is the most important sentence in this article: without a reserve, you will be forced to sell investments at precisely the worst possible moment — in the middle of a downturn, when the same crisis has also deprived you of income. Markets fall deepest at exactly the times when people most need cash. The reserve is what allows you to leave your investments alone and weather the storm.
How much, specifically
The guideline is 3 to 6 months of essential expenses (not your full income — only what you genuinely have to pay: housing, food, utilities, loan repayments). Where in the range:
- Closer to 3 months — stable employment, two incomes in the household, no major commitments.
- Closer to 6 months (or more) — irregular income, self-employment, single earner, young children, mortgage.
Where to keep the reserve
In a savings account, accessible at any time and not subject to fluctuation. Yes, inflation will nibble at it — but that is the price of certainty and liquidity, and for a reserve that is perfectly fine. Do not chase yield with your reserve; its job is to be there when you need it. Part of it can be held in a money market fund or short-term bonds, but a simple savings account is perfectly sufficient.
Order of steps
The reserve is your first goal, ahead of investing (right after clearing expensive debts). Once you have it, you can start investing calmly and regularly — the guide is in the article first steps, step by step. After that, just maintain the reserve and top it up whenever you draw from it.
FAQ
How many months of expenses should the reserve cover?
Usually 3 to 6 months of essential expenses. Closer to three is enough with a stable income and low commitments; closer to six (or more) makes sense with irregular income, self-employment, or when there is only one earner in the household.
Where should I keep my emergency reserve?
In a savings account, where it is accessible at any time and does not fluctuate. Do not chase yield with your reserve — its job is to be safe and on hand. Optionally part of it in a money market fund, but a simple savings account is perfectly fine.
Can I keep my reserve in shares or ETFs?
No. The value of shares fluctuates and in a crisis, when you are most likely to need your reserve, it tends to be at its lowest. The reserve must be stable and liquid. Investments serve growth; the reserve serves safety — they are two separate jobs.
Should I invest even if I do not yet have a reserve?
Build your reserve and clear expensive debts first. Without that cushion, an unexpected situation could force you to sell investments at a loss or take on debt. Only with a reserve in place does it make sense to start investing regularly.