Emergency fund location

cum2soon
cum2soon

Where so you all keep those funds?

Mine has been in a savings account for a few years. I can do better than .75%.

All urls found in this thread:

youtu.be/V-vTOo7f4f8

SniperGod
SniperGod

For better or worse, a savings account or money market fund is the best place. An emergency fund, by definition, needs to be highly liquid so that you can access the monies quickly if needed.

I understand the desire to seek better returns. However, it's best to avoid stocks, ETFs and similar equity assets because the volatility is too high. Bonds or bond ETFs are a possibility, but there is volatility risk there too (not as much, obviously, but enough to be wary).

Another option is certificates of deposit (CDs) which pay slightly better than savings accounts. They're not entirely liquid, however, you'd want to ladder them.

If your emergency fund is equivalent to 6 months or less of your ordinary living expenses, then stick with the savings account. The low interest rate is the simply price of security and prudent planning.

If you've got 9-24 months of living expenses saved, you could consider laddering bulk into tiers. This would increase your returns, slightly.

If you've got 12-24 months saved, you could consider putting 25-50% into a short-term bond fund. It's a bit more risk for a bit more return, but probably safe overall.

Personally, I keep 24 months in cash in a savings account. The additional hassle of seeking a few extra basis points in interest just isn't worth it to me.

Remember: An emergency fund is like an insurance policy. Yes it costs you a little in lost investment opportunity, but it can save your ass if you need it.

TurtleCat
TurtleCat

I keep $25k in a 40%stock/60%bond mix because I'm not a pussy retard like

CodeBuns
CodeBuns

investing your emergency fund
emergency fund in stocks of all things
Unless that it literally your entire investment, in which case you're even dumber.

Sharpcharm
Sharpcharm

pic related

Burnblaze
Burnblaze

emergency fund
$5 bill

Evilember
Evilember

implying only one type of bill
implying I'm not poor as shit
implying this isn't all I've got

StrangeWizard
StrangeWizard

I probably don't even have close to what's in there.
sales went to shit at my job and i've been looking for work for a few months now

cum2soon
cum2soon

I keep it in a credit union account either no card access. That means I can't dip into it without the hassle of visiting the branch in person, so it's safe from good deals coming up on Amazon.

While I was working, it was great to have a regular deposit into a CU too, as they would then look favourably upon car loans etc.

I look forward to being a working man again

MPmaster
MPmaster

put it in a shoe box and buried it in my back yard so the gubmint can't find it.

Poker_Star
Poker_Star

$17.54.

started saving up (aka pocketing whatever change I happened to come across) in October
was up to about $40 at the beginning of the year
had to dip in several times when really needed, otherwise avoid spending as much as humanly possible
little change to add since
all I've got
out of work for 6 years as of next month
fml

Crazy_Nice
Crazy_Nice

Keep my spare money in a boring old savings account (0.95% interest) until I get at least $6K, at which point I move $5K to my stock account and start building the fund again

Booteefool
Booteefool

Thanks for the solid advice, OP here.

I'm only looking at $10k, but also have a slew of padded savings accounts for all of my expenses. Direct deposits go into each savings account (house, groceries, etc.), then the bills are automatically pulled. Since you can only have 5 withdraws/month, I'm held honest and can't 'borrow' any money. If a paycheck stopped, I could run for 4-5 months without needing to replenish the accounts with this fund.

CD rates are around 1.6% and bond indexes are 4-6%. As of now, I've been looking at it like you. The yearly ROI it's worth the time or risk, but I'm starting to second guess that. The difference between a CD and savings account is only 0.85%, or $850. However, like a 401, compound that over time ...

I really like the idea of setting up yearly CDs every month, then rolling it over. If something happens, I would essentially have a paycheck for a year. Bond funds also look tempting.

On the other hand, you have upcoming variables like a possible market crash or rising interest rates.

5mileys
5mileys

I always like to keep some cash. Right now have my emergency fund split 50/50 between cash in my safe and in my checking account.

Flameblow
Flameblow

True, I do have a few grand but can't help but feel it's worse to hold than precious metals.

I guess I'm trying to devise a long term plan, which is hard given you don't know what the future holds.

The difference between of $10k invested at 0.75% verse 4% is $1,800 at 5 years and $4,100 at a decade. Given this 45 year CD chart though, I feel I'm pumping a dead meme.

StonedTime
StonedTime

The mutual fund/ETF industry has invested a lot of money into scaring you away from holding cash. They want you to feel like you're losing money by not investing. Like one of the above posters wrote, think of it as insurance. Sure, you give up a tiny but of interest gains. But you also won't lose the whole thing when that stock you're in starts to go under.

Nojokur
Nojokur

Wrong image ;)

True, I can certainly see the industry for that and was around for the '08
shhhh, it's ok. It'll go back up, keep your money with me

Now probably wouldn't be a good idea to get into the market. Maybe staying in a savings account would be the best route to take.

Supergrass
Supergrass

My savings are in a 1.5% savings account where if i widraw some of the money i wont get interest that month (JUST). But 1.5% is better than the 0% i get on my other account for daily expenses soo

I have for ~4 months worth of expenses. A little overkill tho

haveahappyday
haveahappyday

This may be the saddest thing I've ever read.

Evil_kitten
Evil_kitten

I'm a fairly conservative investor, so I take the approach that I want a "minimum" amount of money that is 100% secure for when I get older, while investing the rest in hopes that I make big gains.

I use CapitalOne (which bought out ING) as my online money market, at 1% interest, and I hold an emergency fund of around $60,000. This should cover me for about two years if I really needed it to. Since starting it, I've added about 2% extra per year simply to pace inflation and maintain real money value.

My more conservative investments are in in a 5-year CD ladder which is around 2% interest that I reinvest fully, effectively staying even in real money terms with current levels of inflation. By retirement I'll have between half to three-quarters of a million via this route, 100% safe money.

I invest around $10k per year between a Roth IRA and Health Savings Account. This is in Target Retirement since I don't have enough invested yet to split into Admiral shares of a lot of the funds. Sadly, I don't have a job 401k or IRA at the moment.

whereismyname
whereismyname

I use CapitalOne

Ditto, they've been my checking/savings for 5 years.

I think I'm pigeonholing myself by saying emergency fund when in actuality, I think I'm looking at a full investment strategy like you've laid out. Congrats by the way, seems like you've got your ducks in a row.

Has anyone used Mango Money?
It's a prepaid debit card that offers a 6% APY for savings accounts up to $5k.
* + $36/yr in fees.

Right now I'm thinking $5k on a Mango card + cash + a secondary savings account, then focus on conservative investments.

PurpleCharger
PurpleCharger

I think I'm pigeonholing myself by saying emergency fund when in actuality, I think I'm looking at a full investment strategy like you've laid out.
Yes, these are very different things. The chart in your post is a pretty decent illustration of the financial buckets that you should be managing.

I will comment, however, that a 3-6 month emergency fund may not be sufficient for some people. That's just the minimum for covering "normal" adverse contingencies, like a job transition or medical situation. However, someone who's job search might last longer than 6 months (e.g., someone in a small or highly competitive field) might want more set aside. Anyone with medical issues might want to pad their emergency fund. And anyone who really cannot afford to let their standard of living fall (e.g., homeowner, parents with school-age kids, etc.) might look to establish a 12, 18 or even 24 month fund.

Mango Money
A quick Google search says its not a scam, but beware of the monthly fees and understand that you can't just withdraw the money in cash (you have to spend it using their card). That's probably fine for many emergency fund uses, but, on the other hand, sometimes you really just need cash.

Playboyize
Playboyize

Emergency fund location
if you don't have it in your hand you don't have it.
especially if emergency includes disruption of bank service traffic or telecommunication.

Sir_Gallonhead
Sir_Gallonhead

You're confusing an emergency fund with an "oh shit" fund. An emergency fund is for extended periods where your income is interrupted for many weeks or months, such as a job loss or a medical issue. An "oh shit" fund would cover an extraordinary situation such as you describe for a day or two.

If banks are closed or telecommunication disrupted for weeks or months in any first-world country, then your money is worthless anyway.

RumChicken
RumChicken

i see, i call the thing you call emergency fund liquid investment compared to long term investment.

also the "oh shit" which is call emergency fund fund must only be part fiat mine is (cash in hardbox) also gold and silver.

girlDog
girlDog

CD ladder

AwesomeTucker
AwesomeTucker

Out of curiosity, where are you geographically?

GoogleCat
GoogleCat

gold and silver is a meme (unless you aren't in the US?)

I have guns and bullets - if you aren't armed someone else is going to just take all your gold and silver by force

Lord_Tryzalot
Lord_Tryzalot

if they know where to look or what for i'm not stupid.
gold and silver are not memes they are good even if the monetary system collapse local or global doesn't matter.

iluvmen
iluvmen

I use CapitalOne
Same here. Have about $120k in there now. This is much more than I used to keep in there, but I am thinking about buying a new house soon, so I don't want to have that cash at risk right now.

Inmate
Inmate

in my anus. I have a ziplock bag I put 5% of all my paychecks and stuff them in my hollowed out buttplug I then insert into my ass. I can beat goatse and no one can manhandle me!

kizzmybutt
kizzmybutt

inflation is higher than interest rate.
Just buy blue chips with dividend giver.

Techpill
Techpill

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youtu.be/V-vTOo7f4f8

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