Where can I invest my money if I want to be able to easily access it in case of an emergency?

I am starting out in investing and I have $8,000 to invest and can also invest an additional $500 every month. Currently, I have a checking account, but no savings account. I am a risk taker and want to earn good interest on the money deposited, but just in case of an emergency, I might need to take back the money. Do I need to open a savings account, CD, or money market account? I want to earn at least 2 to 3 percent in interest. Alternatively, should I invest this money in a mutual fund?

Banking, Investing, Mutual Funds
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1 week ago

It sounds as though you are on track to building a nice nest-egg.  If your $8,000 savings will be increased by $1,000 every two months it can, with time and wise investments, grow to a size that will support you in retirement (though you don't say how old you are, but I hope you are young.  Keep this up for 40 years and you could have over a million in investments.)

I have a couple of comments.  First, you say you are a risk-taker but seem to be considering only the least-risky investments, cash instruments that pay no more than 2-3%.  That's a terrible way to invest for the long term.  If you want income you can buy REITs for 7-8% (give or take), or a good preferred-stock fund at 5.5%.  You can buy stocks in large, mature blue-chip companies that ought to provide modest growth plus a 3% dividend rate.  Or, you can invest for growth. 

All of this requires that you have a long time horizon so figure out just how likely an emergency might be, and how much you could need.  If your job is secure and you can look forward to a rising income, you probably should not have more than a months' living needs held aside.  Keep in mind that as your investment account grows you can set it up with access to margin.  It's a credit line with your portfolio as collateral.  Then, if you need funds you can take them without having to sell any investments -- and replace the funds withdrawn in due course.

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