Emergency Fund - HYSA, VTSAX, VBTLX

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Topic Author
CC268
Posts: 8
Joined: Thu Nov 14, 2019 10:07 am

Emergency Fund - HYSA, VTSAX, VBTLX

Post by CC268 » Thu Nov 14, 2019 1:22 pm

I previously asked about putting my $15k emergency fund into a HYSA. That seems like a no brainer, as right now it is simply sitting in my BoA savings account (0.03%).

However, I'm wondering if taking it a step further and splitting it up 3 ways might not be a bad idea:
-$5k HYSA

-$5k VTSAX

-$5k VBTLX

This would give me $5k of quick liquid cash plus the $6.5k credit I have on my credit card.

Maybe I am overthinking this, but I wanted to get some more feedback on this idea. The topic of "investing" the emergency fund seems to be a fairly polarizing topic - some people recommend it while others highly oppose the idea of investing something that shouldn't be thought of as an "investment" to begin with.

anon_investor
Posts: 575
Joined: Mon Jun 03, 2019 1:43 pm

Re: Emergency Fund - HYSA, VTSAX, VBTLX

Post by anon_investor » Thu Nov 14, 2019 1:45 pm

How many months of expenses is your $15k emergency fund equivalent to?

I would recommend just putting it 100% into a high yield savings account, you want the money there when you need it. Stocks and bonds are too volatile, they may be down (and down for months or years before they recover) when you need to draw from that money.

Bama12
Posts: 41
Joined: Fri Aug 30, 2019 11:48 pm

Re: Emergency Fund - HYSA, VTSAX, VBTLX

Post by Bama12 » Thu Nov 14, 2019 8:15 pm

How is a credit card a emergency fund?

If you dont have the cash you dont have a emergency fund.

retiredjg
Posts: 38402
Joined: Thu Jan 10, 2008 12:56 pm

Re: Emergency Fund - HYSA, VTSAX, VBTLX

Post by retiredjg » Thu Nov 14, 2019 8:20 pm

If you are young and starting out, I would not use any stock fund as part of my emergency fund.

If you are older and established, you may not even need an emergency fund although $5k in the bank is nice.

If your credit card has such a low limit, you are probably just starting out. It is frustrating, but an emergency fund can keep you out of trouble (downward spiral of debt) if/when something unexpected comes up. Don't try to shortcut this. Just do it right. Chances are the money will never get used but that's better than needing it and not having it.

As you build up your little hoard, you will not need to have money sitting on the side any more.

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1789
Posts: 272
Joined: Fri Aug 16, 2019 3:31 pm
Location: OR

Re: Emergency Fund - HYSA, VTSAX, VBTLX

Post by 1789 » Fri Nov 15, 2019 1:35 am

CC268 wrote:
Thu Nov 14, 2019 1:22 pm
I previously asked about putting my $15k emergency fund into a HYSA. That seems like a no brainer, as right now it is simply sitting in my BoA savings account (0.03%).

However, I'm wondering if taking it a step further and splitting it up 3 ways might not be a bad idea:
-$5k HYSA

-$5k VTSAX

-$5k VBTLX

This would give me $5k of quick liquid cash plus the $6.5k credit I have on my credit card.

Maybe I am overthinking this, but I wanted to get some more feedback on this idea. The topic of "investing" the emergency fund seems to be a fairly polarizing topic - some people recommend it while others highly oppose the idea of investing something that shouldn't be thought of as an "investment" to begin with.
Yes you are overthinking. This entire money should be available tomorrow if needed hence called emergency fund. I would just keep it in HYSA or money market fund.
"My conscience wants vegetarianism to win over the world. And my subconscious is yearning for a piece of juicy meat. But what do i want?" (Andrei Tarkovsky)

Topic Author
CC268
Posts: 8
Joined: Thu Nov 14, 2019 10:07 am

Re: Emergency Fund - HYSA, VTSAX, VBTLX

Post by CC268 » Thu Dec 05, 2019 9:44 am

Sorry for the late reply guys. Thanks. I am moving the 15K into a HYSA.

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