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← Lesson
Emergency Fund: How Much and Where to Keep It
Question 1 of 7
Multiple choice
Why is an emergency fund kept in a savings account rather than invested in index funds?
Savings accounts earn more interest than index funds over long periods
Emergency funds need to be immediately accessible and stable in value, market investments can drop 30–40% when you might need the money most
Index funds charge fees that make them unsuitable for emergency savings
The IRS requires emergency funds to be in bank accounts
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