Should You Take Profits to Build an Emergency Fund?

Myth-buster: “My investments are my emergency fund”, nope

Myth-buster: “My investments are my emergency fund”, nope. I get why this sounds efficient. One big brokerage account, plenty of ETFs, some winners you’ve been meaning to trim, so why keep “idle” cash? Because life doesn’t schedule emergencies. Markets don’t either. And that mismatch is exactly where people get hurt.

Here’s the core problem: market drops don’t wait for your transmission to die or your company to announce layoffs. Since 1980, the S&P 500’s average intra-year decline has been about 14% even in years that finished positive (J.P. Morgan Guide to the Markets, 2024). In 2020, stocks fell roughly 34% in about a month during the COVID shock. In 2022, the S&P 500 was down around 25% at the trough. If your “emergency fund” is a stock fund, your bad day at work can line up with the market’s bad month. That’s not a cushion, that’s correlation you didn’t ask for.

And then there’s the mechanics. Selling investments under pressure creates problems that cash simply avoids:

• Forced selling in a downturn = permanent losses. If you sell after a 20% drop to pay a $2,000 bill, that loss is locked in. Cash doesn’t force that trade.
• Taxes bite when you least want them to. Short-term capital gains are taxed at your ordinary income rate, up to 37% federally in 2025, before state taxes. Even long-term gains (0%/15%/20%) can reduce what actually lands in your checking account.
• Timing and access aren’t instant. U.S. equities now settle on T+1 (SEC rule effective May 2024). If you’re in a cash account, proceeds aren’t fully settled until the next business day, and moving money out by ACH can take another 1-3 business days. Some brokers front you funds, some don’t. When the vet needs payment today, “T+1” is still “not yet.”
• Cash reserves prevent worse decisions. A real buffer makes it less likely you’ll raid a 401(k) (10% early withdrawal penalty may apply, plus taxes) or spin up high-interest credit card debt that’s now around 20% APR for many borrowers.

Quick personal note: I’ve watched plenty of smart people convince themselves they’ll “just trim a bit of the winners” if something pops up. And then they call me becuase the winners are down 12% that week. I’m not pretending I’m perfect, I’ve mistimed sells too, but the pattern is predictable.

“The market doesn’t care that your furnace died on a Friday.”

So what will you actually learn in this section? Three things: how volatility turns an investment account into a shaky backstop at exactly the wrong time; the real-world frictions (taxes, settlement, transfer delays ) that slow your access to money; and how a boring cash reserve can save you from tapping retirement or adding double-digit APR debt. We’ll also tackle the reader-favorite question (should I take profits to build an emergency fund? ) including a simple way to do it without blowing up your tax return. And, yes, we’ll talk current yields. High-yield savings are paying around 5% APY right now (varies by bank), which isn’t 7% or anything heroic, but it’s real, daily-accessible cash. That’s the point.

When taking profits for cash actually makes sense

Short answer? When your life risk and your portfolio risk don’t match your cash runway. Longer answer below, but that’s the core. If your job, household setup, or near-term plans are shaky while your cash buffer is thin, skimming gains isn’t “getting defensive,” it’s just being an adult with a calculator.

Start with the boring math: what’s your monthly essential spend (rent/mortgage, food, utilities, insurance, minimum debt)? Call it $E. Your baseline target is 3-6 months of $E in true cash. If you’re self-employed, in a cyclical industry, or a single-income household, push that to 9-12 months. Why the higher bar? Income volatility. I’ve had two clients this year in tech-adjacent roles go from “I’m safe” to “I’ve got 60 days” in a week. That runway is everything.

Use a simple trigger so you don’t overthink it:

• If cash < 3 months of $E: redirect new contributions and skim portfolio gains first, before adding to risk assets. No hero trades until the floor is rebuilt.
• If cash is 3-6 months of $E: you can split, half to equities, half to cash, until you hit your target.
• If you’re above target: fine, keep compounding; just revisit after any life change.

Life risk isn’t abstract. Near-term goals raise the cash bar fast: home purchase later this year (earnest money + closing costs), a baby on the way, a planned job change with a gap, these are real, dated cash needs. Market’s been choppy this summer, and while high-yield savings are still around ~5% APY in September 2025 (varies by bank), equities haven’t exactly been a straight line. If you know a big check is coming due, you don’t want that money tethered to a stock that’s swinging 3% a week.

Now portfolio risk. Concentration is sneaky. If you’ve got a big chunk in one name, especially employer stock, or a single hot sector, that’s prime trimming territory. Yes, even the crowd favorites. This year we’ve watched leadership rotate hard, AI winners aren’t bid every single day, and your paycheck and stock riding the same cycle is double exposure. Trim the oversized limb; keep the tree healthy.

Reality check I keep taped to my monitor: Bankrate’s 2024 survey found only 44% of Americans could cover a $1,000 unexpected expense from savings. If that’s you, your first dollar of profit belongs in cash, not the next trade. Read that again, your first dollar of profit goes to cash. Build the floor, then the walls.

How to execute without knotting up your taxes? My take (not tax advice, just what I do myself): prefer trimming long-term winners when possible, harvest smaller lots across positions to avoid creating a single big taxable event, and use this year’s losses (if any) to offset. Also, remember settlement and transfer lag, T+1 is faster now, but bank transfers can still take a day or two. Emergencies don’t schedule around ACH windows.

One more practical loop: set a standing “profit skim” rule. Example: any month the portfolio is up >1% and cash is below target, move 10-25% of that month’s gain into your savings account automatically. It’s mechanical, it’s boring, it works. And if markets sag? You’ll be glad you raised cash when you had green on the screen.

Cash is a position. In 2025, it even pays you to wait.

Do I love selling winners? No. Do I hate forced selling during a drawdown because a transmission died? Absolutely. I’d rather trim on my terms, even if it feels a little cautious, than sell into a hole. That’s not pessimism; that’s just runway management.

Tax-smart mechanics for raising cash from your portfolio

Tax‑smart mechanics for raising cash from your portfolio

Here’s how I actually harvest proceeds with the least tax drag, practical, 2025 rules, no magic tricks. Start by ranking lots by tax cost. Prioritize long‑term gains (held >1 year). They’re taxed at federal rates of 0% / 15% / 20% depending on your taxable income. Short‑term gains? Those get hit at your 2025 ordinary income rate, which can be a lot higher. If the same $10,000 gain can be long‑term at 15% or short‑term at, say, 32%, I know which door I’m knocking on.

Next, the quiet gotcha: the 3.8% Net Investment Income Tax (NIIT). If your modified AGI is above $200,000 (single) or $250,000 (married filing jointly), NIIT can apply to investment income. Those thresholds are set by law and not indexed. So inflation lifts wages but not those tripwires, people are falling into NIIT more often than they realize in 2025.

Specific‑lot identification is the lever most folks skip. Set your brokerage tax method to “Specific Lot” and proactively pick the highest‑cost shares when you sell. That shrinks the taxable gain without changing your cash raised. If you don’t specify lots, most brokers default to FIFO and you accidentally sell the oldest, lowest‑basis shares. I still see this twice a week, no joke.

Pair gains with losses when it’s sensible. Capital losses offset capital gains dollar‑for‑dollar, and up to $3,000 of net capital losses can reduce ordinary income each year, with the rest carrying forward. One caveat: watch the wash‑sale rule, if you harvest a loss, don’t rebuy a substantially identical security inside 30 days across any account, including your spouse’s. It’s annoying, I know, but it’s the rule.

Mind state taxes. A bunch of states tax capital gains as ordinary income; a few add surtaxes. Your federal plan can look neat while state tax quietly moves the goalposts. Also consider Q4 mutual fund distributions, those can drop taxable gains into your lap while you’re raising cash. Not great timing, but it happens.

One more 2025 wrinkle: TCJA provisions are scheduled to sunset after 2025. Brackets and deduction rules could look different in 2026. That means realizing some long‑term gains this year, up to your 0% or 15% band, might be attractive, especially if NIIT won’t bite. Or, if you’re near a cliff, it can make sense to wait until January. It’s a gray area, and plans aren’t static.

And don’t overcomplicate this. If you’re under your cash target, paying some tax to de‑risk is usually cheaper than panic‑selling in a bear market. I’ll repeat it because it matters: better to trim into strength and pay a manageable bill than dump into weakness and hate yourself for it later. Cash buys time, time to think, time to choose, time to not rush. It’s not perfect, it’s practical.

• Checklist I use: confirm long‑term status, check NIIT thresholds, select specific lots, offset with harvested losses, estimate state tax, and schedule trades away from ex‑div dates.
• If you’re close on NIIT or bracket edges, try splitting sales across December/January to straddle tax years, it’s clunky, but it works.
• And yes, T+1 settlement is faster now; still budget a day or two for cash to hit your bank. Life doesn’t wait for ACH. Mine sure doesn’t.

Where to park the emergency fund right now

Keep this simple on purpose. Emergency money isn’t a hobby, it’s a shock absorber. I keep the first month of expenses in a plain checking buffer (yes, earning basically nothing) because when the water heater dies on a Sunday, I don’t want to wait on an ACH. After that first month, the rest can sit in a high‑yield savings + short T‑bill combo. Boring works.

Core: FDIC/NCUA‑insured high‑yield savings or money market deposit accounts

For the bulk, use an online high‑yield savings account (HYSA) or a money market deposit account at an FDIC bank or an NCUA credit union. Insurance is up to $250,000 per depositor, per institution, per ownership category. As of September 2025, many reputable online banks are paying in the mid‑4s to low‑5s% APY, rates float, but they’re still meaningfully higher than 2020-2021 levels. Move cash between buckets as needed, no gotchas, no term lock. I know I’m oversimplifying fees/tiers, check your bank’s small print, then ignore the rate-chasing rabbit hole.

Simple ladder: 4-26 week Treasury bills

T‑bills are clean: backed by the U.S. government, interest is exempt from state and local income tax, and the maturities (4, 8, 13, 17, 26 weeks) give you rolling liquidity. As of mid‑September 2025, the 3‑month T‑bill yield is hovering around ~4.9% (U.S. Treasury daily yield curve), give or take a few bps day to day. Set a small ladder, say, split into four pieces, spaced a month apart, so something’s always maturing. Use auto‑roll at your brokerage or TreasuryDirect if you don’t want to babysit. If you live in a high‑tax state, the state-tax exemption is real money. Quick math: at a 10% state bracket, $10,000 of T‑bill interest at 5% saves ~$50 a year versus a taxable bank account. Not life‑changing, but lunch for the week.

Money market mutual funds (government/treasury)

These are not FDIC‑insured, but the government/treasury funds invest in T‑bills, repos, and agency paper and are designed to be very conservative. They aim to keep a $1 NAV with same‑day liquidity. Expense ratios are usually ~0.10%-0.30%. Context: money market fund assets are over $6 trillion in 2025 (ICI data), which tells you a lot of cautious cash is sitting here. I use these as the sweep at my brokerage, fast to trade, decent yield, and no friction when I need to wire out. If you want an extra belt‑and‑suspenders vibe, prefer “Government” or “Treasury” in the fund name, not “Prime.”

I Bonds as a secondary buffer

I Bonds adjust with inflation and can be a nice “sleep‑well” piece, but there’s a 12‑month lockout, and if you redeem within five years you forfeit the last three months of interest. That’s why they’re not ideal for your first layer of emergency cash. I keep them as an outer ring, the money I hope not to touch for a few years. Small note I haven’t mentioned yet: annual purchase limits are $10k per SSN electronically (plus up to $5k via tax refund paper), so you can’t plow your whole reserve in even if you wanted to.

One way to put it together

• 1 month of expenses: checking buffer (instant access).
• 2-5 months: HYSA/MMDA with FDIC/NCUA insurance.
• Remainder: short T‑bill ladder (4-26 weeks) or a Treasury/Government MMF for quick liquidity.

Rates will wiggle, Fed path is still debated this year, but the framework doesn’t. Liquidity first, principal safety second, yield third. My roof leak in March reminded me: speed beats cleverness when life happens. Keep the boring stuff boring.

What to sell (and what not to touch

What to sell ) and what not to touch

Start in your taxable brokerage. That’s the account built for flexibility, and you keep your retirement compounding intact. I tell clients to trim from two buckets first: (1) overweight single-stock positions that ran on you (nice problem to have), and (2) broad equity funds that pushed your stock/bond mix beyond target. If you’ve got gains, prioritize long-term ones. Long-term capital gains are taxed at 0%, 15%, or 20% in 2025 depending on income, while short-term gains get hit at ordinary rates (up to 37%). If you also have losers hanging around, realize some losses to offset gains and reduce the tax bite. And if you’re in high-income territory, keep an eye on the 3.8% Net Investment Income Tax, it can tack on a bit at the margin.

Don’t tap your 401(k) or traditional IRA unless we’re in true break-glass territory. Early distributions before age 59½ usually face a 10% penalty on top of regular income tax. That combo doesn’t just sting now, it kneecaps compounding over the next 10-30 years. I’ve run those “just a small withdrawal” scenarios too many times; the ending balance 20 years out is routinely six figures lower. Not worth it unless you’ve exhausted cleaner options.

Roth IRA contributions, key word: contributions, can be withdrawn tax- and penalty-free. Earnings are different; those can trigger taxes/penalties if you’re early. Treat Roth contributions as a backstop, not Plan A. The Roth is your highest-octane compounding bucket. I keep mine fenced off mentally, but I like knowing it’s there if two bad things hit at once (layoff + medical bill, for example).

Be cautious with 401(k) loans. On paper they look harmless. In practice, job separation is the gotcha. If you leave with a loan outstanding, the balance is typically “offset” and becomes taxable unless you come up with cash and roll it over by your tax filing deadline (including extensions). Also remember the basic plan limits: loans are generally capped at the lesser of $50,000 or 50% of vested balance. I’ve watched a perfectly fine plan turn messy when a reorg hit two weeks after someone borrowed.

Employee stock (RSUs/ESPP) deserves its own policy. RSUs are taxed as ordinary income at vest, so after vesting, sell a slice on autopilot and route it to cash until your emergency fund is fully funded. With ESPP, that 5%-15% purchase discount is great, but concentration risk isn’t. I usually suggest selling at least enough shares each period to keep your emergency fund target on pace, then revisit how much company exposure you actually want. One caveat: check blackout dates and your trading policy, compliance pain is real.

Common exceptions I hear about every week, and when they can make sense:

• Short-term high-cost debt payoff: If you’re very close to your emergency goal and you’re carrying 20% APR credit card debt, trimming a taxable gain to finish the fund and immediately snowball the card can be rational math.
• HSA: If you’ve been cash-flowing medical expenses, you can reimburse yourself later from the HSA, tax-free, once documentation is solid. I’m a fan of using this instead of touching retirement accounts.
• Roth backstop: Temporary cash crunch and you’ve exhausted taxable? Pull contributions, note the amount separately, and make a plan to “re-fill” within 12-18 months. It keeps compounding mostly on track.

Personal note: Earlier this year I sold a chunk of an outsized semiconductor position to top off a client’s cash buffer. Yes, felt a little silly when the stock popped another 4% the next week. Two months later their furnace died. They were glad we had cash; neither of us remembered the 4%.

One last thing because markets are choppy this year around rate-cut odds: if you’re selling funds in taxable, use specific-lot ID so you can target high-basis shares. It’s a small administrative step that can save real dollars. And if I’m misremembering the exact vesting tax rate nuance on your RSUs (some plans withhold at a flat 22%/37% tier), check your HR portal, company payroll handling can vary.

Edge cases: high-rate debt, tiny accounts, and volatile paychecks

This is where the clean spreadsheet logic meets messy real life. If your credit card APR makes your expected investment return look small, you probably feel stuck. You’re not. Do a quick two-step: build a mini-cushion fast, then go after the debt hard. When I say high-rate, I mean the stuff that compounds against you at nosebleed levels. The Fed’s G.19 series shows the average APR on cards that actually accrue interest was about 22.8% in Q4 2024. That’s brutal versus a long-run 6-8% stock return assumption. So, split the difference: get a $1-2k mini-fund in a high-yield savings account this month or next (many are paying roughly 4.5-5% APY right now, give or take), then pivot 80-90% of extra dollars toward the card while still dribbling 10-20% into cash. It keeps you from swiping the card the next time a tire blows.

Just starting with a tiny portfolio? It’s okay to pause new investing briefly to hit your first 3 months of expenses. Yes, even if that means “missing” a dip-rally-dip this fall. The risk reduction is worth it. I can hear my younger self arguing for maxing the Roth come hell or high water. But your sequence of cash needs, sorry, jargony, what I mean is the order in which bills hit your life, matters more than capturing an extra 1% this quarter. Once you get to three months, resume contributions and keep nudging cash toward 6 months at a slower pace.

Variable income (gig, commission, founders on uneven draws): you don’t have the luxury of razor-thin buffers. Target 6-12 months of expenses. I know that sounds heavy. Break it down into automatic weekly or per-pay-period transfers, $75 on Fridays, $200 every 15th, whatever fits. The goal isn’t perfect precision; it’s a habit that keeps building when your focus is elsewhere. If your revenue cycles around holidays or annual renewals, bias transfers into the boom months and keep something going in the lean ones so you don’t fully stall.

Windfalls and rebalancing moments are your friend here. Bonuses, tax refunds, vested RSUs, even the odd insurance premium rebate, skim a fixed slice to the emergency bucket. 20-40% is a common band I use. And when you rebalance, earlier this year a lot of folks sold some tech to get back to target weights, use that trade to top up cash. No need to guess where the S&P goes next week. You’re just implementing the plan.

How to structure the next 90 days if this is you:

• Week 1: Open/confirm a high-yield savings account; label it “Buffer,” not “Savings,” so you dont raid it for vacations.
• Weeks 1-4: Move $250-$500 per week until you hit $1-2k. If that’s too tight, do $100; speed beats perfection.
• After $2k: Shift to an 80/20 split, 80% of surplus to the highest-rate card, 20% to the buffer, until three months’ expenses are set.
• Gig/commission: Make the transfer cadence match your pay cadence, weekly, biweekly, or after each settlement. Keep it boring and automatic.

Personal note: I once told a salesperson client to hold off new ETF buys for eight weeks to finish month three of cash. Hated saying it. Then their pipeline slipped in June, and the cash kept their 401(k) loan finger off the trigger. We high-fived, figuratively, we were on Zoom, because that’s real money saved.

One last nudge: compare your card APR directly to your expected return. If it’s 22% vs. a 7% long-run portfolio guess, the math isn’t subtle. Kill the balance, keep feeding the buffer, and let the market compounding party start when the anvil isn’t tied to your ankle. It’s not elegant, but it works. And yeah, it’s boring, boring wins more than we give it credit for.

Your 20-minute challenge: set the sell rules and move the cash

Quick, messy, effective. Grab a notepad or your phone.

1. Write your cash target and gap, real dollars, not vibes. Target = months of essentials × monthly essentials. If essentials are $3,200 and you want 4 months, that’s $12,800. If your current cash is $6,500, your gap is $6,300. Write both numbers. Don’t round yet; precision helps you prioritize lots to sell.
2. List the positions you’ll trim first, in order, with lot IDs if you can. Start with overweight names or funds that ran since last year, then high-basis lots to manage taxes. Example queue: (1) VTI Lot 2023-12-15, basis $231.40, qty 40; (2) AAPL Lot 2021-08-23, basis $147.10, qty 20; (3) QQQ Lot 2022-11-10, basis $276.05, qty 15. If your broker shows specific-lot ID, pick it. If not, flip to FIFO and note it so you’re not guessing mid-trade.
3. Pick a tax-aware date this week to place trades. Two simple guardrails: (a) prefer long-term gains lots (>1 year) for lower rates; (b) if you harvested losses earlier this year, mind the 30-day window on identical funds so you don’t trigger wash sale adjustments, yes, it’s mostly about losses, but mismatched timing can still mess with basis tracking. Place the orders on your chosen morning this week, tight spreads are usually better near the open for liquid ETFs, but don’t overthink it. Set a calendar reminder for a Q4 check-in: I’d put it the week of December 9, 2025. You’ll top off any remaining gap before year-end.
4. Confirm your cash pipeline. Open or verify a dedicated HYSA or T-bill setup and automate transfers on payday. In 2024, many top HYSAs paid roughly 4.5%-5.25% APY (Bankrate reported ranges like that), and 3-month T-bills hovered around ~5.3% in October 2024 per Treasury data. Rates move, but it’s still real money versus idle cash. Set an automatic sweep every paycheck: “$X to HYSA/T-bills until gap = $0.”
5. Bonus sanity check, use 2024-2025 tax room before year-end. If you’re in the 0% long-term capital gains bracket, part of your gains could be taxed at 0%, the thresholds adjust annually, but the bracket exists. Verify your 2025 estimate against 2024 filed numbers, then sell what you need this year while you’re still in the band. If you’re in the 15% LTCG zone, fine, still might be worth it to hit the cash target. Either way, act, don’t wait for some perfect window.

One more piece that’s blunt: credit card APRs averaged above 22% in 2024 (Fed data). If you’re juggling that while hesitating on trimming a little QQQ, the math isn’t close. Pay the card, fill the buffer, then rebuild the position methodically later this year if you want. I’ve had to tell clients, and myself, honestly, to stop improve the last 0.2% and just push the button.

Personal note: I set my own reminder for Thursday 9:15am, sell specific lots first, then a same-day ACH to the HYSA. I’ve also mistyped the order size before, fat fingers, so I read it out loud: “forty shares, not four hundred.” Sounds silly. Saved me once.

Write the target, queue the lots, schedule the trade, automate the cash. Twenty minutes. Boring process, real outcomes.

Frequently Asked Questions

Q: How do I build an emergency fund without blowing up my taxes?

A: Short answer: use cash flow first, then be surgical with any sales. Aim for 3-6 months of essential expenses (9-12 if you have variable income). Tactics:

• Redirect savings now: auto-transfer on payday to a high‑yield savings account (HYSA). Even $150-$300 per paycheck stacks up faster than you think.
• If you must sell investments, prioritize long-term gains (held &gt;1 year) to stay in the 0%/15%/20% brackets vs. short-term at ordinary rates (up to 37% federally in 2025, plus state). Use specific-lot ID at your broker to pick higher-basis, long-term shares.
• Watch bracket cliffs: capital gains can trigger NIIT (3.8% above $200k single/$250k MFJ) and reduce credits. Run a quick tax projection or use last year’s return as a sandbox.
• Offset gains: harvest losses elsewhere if you have them (just avoid wash-sale rules).
• Avoid underpayment penalties: bump W‑2 withholding for the rest of the year if you realize big gains, cleaner than quarterly estimates. And remember the “why”: since 1980 the S&amp;P’s average intra‑year drawdown is ~14% (J.P. Morgan Guide to the Markets, 2024). Your job loss won’t politely wait for a rebound.

Q: What’s the difference between a HYSA, a brokerage money market fund, and short‑term T‑bills for an emergency fund?

A: They’re all cash‑like, but they behave differently:

• HYSA (FDIC/NCUA up to limits): Daily liquidity, ACH in/out, variable APY, zero market risk. Great first stop for 1-6 months of expenses.
• Brokerage money market fund (prime or gov’t): Same‑day trade, usually T+1 cash, yields track short rates, not FDIC but underlying holdings are very short/very high quality. Check your broker’s settlement and sweep policy.
• T‑bills (4-13 week): You can hold to maturity for known yield, or sell in seconds during market hours if needed (price can wiggle a hair). Best via TreasuryDirect or in-brokerage; set maturities laddered monthly. Practical setup I use: $1-2k in checking (instant), bulk in HYSA, then a ladder of 4-13 week T‑bills or a government money market fund as tier‑2. Keeps liquidity high and yields decent.

Q: Is it better to sell some winners now to fund my cash buffer, or keep riding the market?

A: If you don’t have at least one month of true expenses in cash, I’d sell a slice now, markets don’t schedule their drops around your car repairs. Phase it: e.g., sell 1-2% of the portfolio weekly for 4-6 weeks to average any price noise, target long‑term lots, and place limit orders so you don’t get a goofy fill. Once you hit your target (3-6 months), stop selling and rebuild risk assets through ongoing contributions. Waiting “for a better time” is just market timing in disguise, and if 2025 throws a routine 10-15% pullback, the math gets worse.

Q: Should I worry about settlement and access delays, or are there alternatives if I need cash same‑day?

A: Yes, T+1 is still not “right now.” Have a layered plan:

• Keep $1-2k in checking for truly same‑day stuff.
• HYSA at the same bank as your checking can enable instant transfers (some fintechs do this).
• Broker tools: a debit card on a money market sweep or instant cash advance against unsettled sales (policy varies by firm). Margin as a last‑resort bridge if you must, interest isn’t cheap.
• Backstops (use carefully): a HELOC for large, rare shocks; or a 0% intro APR card as a 30-90 day bridge, only if you can repay before promo ends. Set an auto‑payment plan immediately.
• Payroll advance/401(k) loan? I’m not a fan, but a small 401(k) loan beats a taxable forced sale in a 20% drawdown or a high‑fee hardship withdrawal. Bottom line: build cash first so these “alternatives” stay alternatives, not habits.

@article{should-you-take-profits-to-build-an-emergency-fund,
    title   = {Should You Take Profits to Build an Emergency Fund?},
    author  = {Beeri Sparks},
    year    = {2025},
    journal = {Bankpointe},
    url     = {https://bankpointe.com/articles/take-profits-emergency-fund/}
}