2) Emergency fund
This may seem to be insurance more than an investment, and to some extent it is. In the larger sense, though, you are securing your other investments. This account should come to at least three, preferably six, months of living expenses and is there to ensure that a financial hiccup, such as a layoff, a strike, an illness, or something else does not become financial disaster. If you don’t have an account like this, you could well find yourself having to sell off assets, perhaps at the wrong time or the wrong price, and your net worth will take a hit in the process. In fact, you could end up losing a source of income and quickly find yourself in a downward spiral. Do not overlook this important fund.