For your Emergency Fund goal, we calculate three months of take-home pay (salary minus taxes, including Social Security and Medicare taxes) and try to get you there as quickly as we can.
We believe our clients can’t afford any investment risk with their emergency money, so we place all assets in our Emergency Fund goal in FDIC Cash. This means that these assets are insured by the Federal Deposit Insurance Corporation, which the U.S. government describes as “an independent agency of the United States government that protects you against the loss of your insured deposits if an FDIC-insured bank or savings association fails. FDIC insurance is backed by the full faith and credit of the United States government.”
The interest rate on the funds in this goal is 0.01%, or 1 basis point. It's a very low interest, but we believe that a safety net shouldn’t be subject to market downturns. We don't charge a management fee for assets in the Emergency Fund goal.
Please note that it can take up to 7 business days to withdraw funds from this goal. Folio keeps your funds in a secure account as FDIC cash, so it takes several days to request those funds and have them settle into your Folio account before we can transfer them to your linked bank account. You can find more information here.