Clark’s Take on Whether You Should Invest Your Emergency Fund in Short-Term Bond Funds
Clark says: "That's a strategy that I do myself, knowing that you're earning effectively zero — half a point to .70 of a point in an online savings account — just not much money at all. So doing short-term bond funds — depending on your tax bracket whether you go tax-free or taxable bond funds — is a potential strategy.
“You do have though the chance, even in a short-term bond fund, that you could lose money. If interest rates rise, the value of your holdings in the bond fund could go down, but it is a relatively low risk, low enough that it is the same strategy that I use.”