[iamthemonster]

It probably depends greatly on your personal circumstances but if you are already investing, or have a Home Equity Line of Credit available, or good credit so that you can get credit cards, then it's quite possible that an emergency fund is just not required (or in other words you keep your emergency fund invested) https://earlyretirementnow.com/2021/05/26/the-emergency-fund...

I think younger folk or those in a less financially secure position could be better off holding cash rather than investing their fund, but those people will also have more frequent use of an emergency fund (i.e. an emergency to a young person could be significant car repairs of $1500 where someone who's 25 years into their career could more likely take that in their stride)

So basically, my cop-out is "it depends" but as a rule of thumb, stocks are normally ok during inflation as you are owning a slice of the economy that is undergoing inflation.

The best security against economic changes is to try to keep a large gap between spending and earning; I think the question of "where to put your rainy day fund" is then less relevant.

[k8sToGo]

Stocks don't make sense for emergency funds. They go up and down. Emergency funds have to be available 24/7 and you cannot wait until it goes up again.

EDIT: I should also add that depending on your region (especially in Europe) there can be serious tax implications if you take it out all at once.

[fy20]

A lot of this is very US specific. Large amounts of credit for cheap with little due diligence is not a thing in Europe. The banks in my country do not even offer home equity loans.

On the other hand your emergency fund needs to be a lot smaller, because of social support provided by the society. If you are unemployed and break a leg, you aren't going to need to pay a $20,000 hospital bill.

[nprateem]

You're owning a slice of companies that have loaded up on cheap debt.

In the 70s you'd have lost 30% of your money in adjusted terms if you put your money in a tracker.

[misja111]

Stocks as a general protection against high inflation is an extremely bad advice, unless you specifically pick those stocks that will go up together with inflation. But most stocks will do exactly the opposite! The reason is that stock prices are inversely correlated with market interest rates. And when inflation goes up, central banks will increase interest rates to suppress inflation. This is happening at this moment already.

There are very few stocks that will keep up with high inflation. These are for companies whose valuation is mostly based on the properties they posess, such as e.g. real estate.