How Much Cash Should You Hold During Inflation?
In the past, I heard that 1 million won was enough for an emergency fund, but given today's prices, it feels like you'd need at least 2 million won. I'm also worried about covering living expenses while working, and I've increased my stock and dollar holdings—but what if I suddenly need cash? I could put money in a CMA instead of a fixed deposit, or sell ETFs for quick cash, but I hesitate to actually cut my losses. Does anyone have experience to share on how many months' worth of income should be held as cash?
10 answers
Yeah, these days you gotta have at least 200 on you to feel secure.
Setting aside 3–6 months of income is a stable buffer. In my experience, if you have an aggressive investment style, keeping just 3 months is fine; if you're conservative, it's better to hold 6 months or more. You shouldn't use stocks as an emergency fund—when you really need cash and the market is down, you'd have to sell at a loss. A CMA lets you withdraw within a day and earns a little interest, so start with that.
If you're hesitating on cutting losses, just set aside 300 as an emergency fund lol
Well, doesn't that depend on the person? What matters is your income level and how much your fixed expenses are.
I always keep about three months' worth of income in cash equivalents. I put all the rest into investments.
You can sell ETFs right away, but not when you consider the settlement date lol. What you said is exactly the cash liquidity trap.
Oh, I was curious about this too. I was having a similar concern.
I park six months' worth of living expenses in a CMA for now. Since stocks and dollars are different in nature, I think they should be treated separately.
Isn't holding a lot of cash during inflation actually a loss? There are savings accounts and short-term bonds, so why stick with cash?
I once had to have surgery out of the blue. At that time, I didn't even have 1 million won in cash, so I really went through hell. I'd advise you to absolutely withdraw 5 million won in cash and keep it handy.