Lesson 4 of 5 · 5 min read
Emergency buffer first
You invest with money you can do without for a while. That's why an emergency buffer always comes first.
Why a buffer?
A broken washing machine, a layoff or an unexpected bill — life surprises you. With a buffer you don't have to sell your investments at a bad moment just to make ends meet.
How big?
A common rule of thumb is 3 to 6 months of fixed costs in a separate savings account. If you have an uncertain income (self-employed), aim for 6+ months instead. If you have a stable job, 3 months may be enough.
Buffer ≠ investing
Your emergency buffer belongs in an instantly accessible savings account, not in stocks. The goal is security and availability, not returns. Only once your buffer is in place do you start investing for the long term.
Stocky says
Without a buffer you become a forced seller: right in a crash (when your job is shaky) you have to sell your stocks at their low point. The buffer is what protects your investment from real life.
Remember this
- An emergency buffer prevents you from having to sell your investments at a bad moment.
- Rule of thumb: 3 to 6 months of fixed costs, with uncertain income (self-employed) 6+ instead.
- The buffer belongs in an instantly accessible savings account, not in stocks.
- Only start investing for the long term once your buffer is in place.
There is a quiz for this lesson
3 questions that check whether it stuck. They live in the app, because a quiz nobody grades teaches nothing.
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