Where do you keep your Emergency Funds? How is it invested?

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LookinAround
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Where do you keep your Emergency Funds? How is it invested?

Post by LookinAround » Thu Jan 09, 2020 5:00 pm

More of a curiousity question...

I was wondering if people keep their emergency funds within or outside of their investment accounts? If I recall, when calculating investment portfolio totals they shouldn't include your Emergency Fund amount?'

If you keep your EF as an asset within an investment account then do you subtract it out each time you run a portfolio anlaysis tool? Seems kind of a pain? As also the investment account total you see in your tools would always be inflated. I guess you'd always have to mentally subtract emergency fund amount from what you see as a portfolio total.

So what do you do? And how what do you keep your EF in?
> CDs? What terms?
> Savings
> Other???

HawkeyePierce
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Re: Where do you keep your Emergency Funds? How is it invested?

Post by HawkeyePierce » Thu Jan 09, 2020 5:03 pm

I currently keep mine in a CD at Ally earning 2.3%. Once it matures I might move to CDs at Schwab now that they've got an autoroll feature.

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climber2020
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Re: Where do you keep your Emergency Funds? How is it invested?

Post by climber2020 » Thu Jan 09, 2020 5:06 pm

In years past, I kept my emergency fund in a regular savings account at my bank. At the first of each year, I'd use this to fund our IRAs, then gradually fill it back up over the course of the year.

Lately, my taxable account has grown enough that I don't keep much of an emergency fund anymore. If I need the cash, I'll sell some stock funds from taxable. If the market has taken a recent dive, I'll sell some stock funds from taxable and exchange an equivalent amount of bonds to stocks in my tax advantaged accounts so I'm not selling low.

I did include my EF as part of the fixed income portion of my portfolio, but it was a relatively insignificant amount that made no practical difference.

lakpr
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Re: Where do you keep your Emergency Funds? How is it invested?

Post by lakpr » Thu Jan 09, 2020 5:10 pm

My emergency fund, enough for about 6 months, is invested in a 3% Max Checking account ($15k each for me and my wife) at Lake Michigan Credit Union. To earn that 3% you have to go through some hoops, but minimal. Agree for all communications to be electronic, login at least 4 times per month, and make at least 10 debit card transactions per month. The last requirement I meet by charging $1, $1.05, $1.10 etc ... 10 times all in a single day, to pay my internet service provider.

SeaToTheBay
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Re: Where do you keep your Emergency Funds? How is it invested?

Post by SeaToTheBay » Thu Jan 09, 2020 5:12 pm

2/3 in Marcus 13-mo no-penalty CD: 2.35% (opened June 2019 before rates declined)
1/3 in Marcus Savings acct: currently 1.70%

GoldPressedLatinum
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Re: Where do you keep your Emergency Funds? How is it invested?

Post by GoldPressedLatinum » Thu Jan 09, 2020 5:24 pm

I keep bouncing it around various banks to earn sign up bonuses. $300 just posted today for US Bank that i opened 56 days ago and funded with $2,000. The bonus is taxable, but even if I keep just $200 of it, that's still a 65+% interest rate. No early termination fee for closing the account, so I'll close it this upcoming weekend and start a new bank account.
Last edited by GoldPressedLatinum on Thu Jan 09, 2020 5:32 pm, edited 2 times in total.

MathWizard
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Re: Where do you keep your Emergency Funds? How is it invested?

Post by MathWizard » Thu Jan 09, 2020 5:24 pm

First Tier (about 3-6 months expenses) Savings in bank or CDs

2nd Tier (about 18 months expenses) : Roth Contributions: contrary to how the wiki says that I should have it invested (low risk bonds)
I originally had it invested 100% index funds. Now it is 50/50. I had the ability and need to take that "risk".

Trev H
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Re: Where do you keep your Emergency Funds? How is it invested?

Post by Trev H » Thu Jan 09, 2020 5:26 pm

Many years ago... I used to keep about 1/3 in local bank savings (quick access) but earned almost no interest.
1/3 at Capital One savings... where it earned a bit more interest.
1/3 invested in Wellesley Income Fund, in taxable space. I think the after tax return on this has been around 5% (it has been a while since I checked).

That was many years ago..

Today... I still have that Wellesley Income fund investment and it has grown nicely. I have used some of this 2x when needed and it has still grown far above my initial investment.

I also have a couple of nice chunks of TSM and FTSE-XUS in Taxable space.

I still have a small amount in savings at local back (for quick access) and some designated savings at Ally.

I also have a HSA now which I contribute the max to and my company puts in a nice chunk too.

This all has it covered well.

Trev H

Faerris
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Re: Where do you keep your Emergency Funds? How is it invested?

Post by Faerris » Thu Jan 09, 2020 5:27 pm

We have 100% of our emergency fund (6mo + 25%) invested in the Vanguard Tax-Managed Balanced (VTMFX) fund. We have the 25% buffer in place to account for any dips in the market.

This last year, we were able to use the gains realized in the account to help fund a car down-payment with minimal tax implications (due to long term capital gains). It's since gained back that withdrawal and then some. Needless to say, we love using this account for our EF!

Trader Joe
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Re: Where do you keep your Emergency Funds? How is it invested?

Post by Trader Joe » Thu Jan 09, 2020 5:32 pm

LookinAround wrote:
Thu Jan 09, 2020 5:00 pm
More of a curiousity question...

I was wondering if people keep their emergency funds within or outside of their investment accounts? If I recall, when calculating investment portfolio totals they shouldn't include your Emergency Fund amount?'

If you keep your EF as an asset within an investment account then do you subtract it out each time you run a portfolio anlaysis tool? Seems kind of a pain? As also the investment account total you see in your tools would always be inflated. I guess you'd always have to mentally subtract emergency fund amount from what you see as a portfolio total.

So what do you do? And how what do you keep your EF in?
> CDs? What terms?
> Savings
> Other???
I keep my emergency fund in the Vanguard Prime Money Market Fund (VMMXX) and I am very happy.

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dogagility
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Re: Where do you keep your Emergency Funds? How is it invested?

Post by dogagility » Thu Jan 09, 2020 5:49 pm

I keep half in a money market fund and half in my Roth IRA invested largely in equity index funds.
"The stock market is a device for transferring money from the impatient to the patient" -- Warren Buffett

NotTooDeepLearning
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Re: Where do you keep your Emergency Funds? How is it invested?

Post by NotTooDeepLearning » Thu Jan 09, 2020 6:12 pm

100% of my emergency fund is in my roth. I don't worry about calculating portfolio totals. When I make more money I'll keep some in a CD.

Blue456
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Re: Where do you keep your Emergency Funds? How is it invested?

Post by Blue456 » Thu Jan 09, 2020 6:47 pm

LookinAround wrote:
Thu Jan 09, 2020 5:00 pm
More of a curiousity question...

I was wondering if people keep their emergency funds within or outside of their investment accounts? If I recall, when calculating investment portfolio totals they shouldn't include your Emergency Fund amount?'

If you keep your EF as an asset within an investment account then do you subtract it out each time you run a portfolio anlaysis tool? Seems kind of a pain? As also the investment account total you see in your tools would always be inflated. I guess you'd always have to mentally subtract emergency fund amount from what you see as a portfolio total.

So what do you do? And how what do you keep your EF in?
> CDs? What terms?
> Savings
> Other???
33% high yield savings, 33% CD 1 Year no penalty in Ally Bank, 33% Wellesley Fund.

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GerryL
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Re: Where do you keep your Emergency Funds? How is it invested?

Post by GerryL » Thu Jan 09, 2020 6:57 pm

I've never actually designated cash as Emergency or other. I just know I have access to cash outside my investment accounts to "tide me over." As a retiree on SS, that is not as big a concern as when a paycheck could suddenly disappear.
My credit union holds my day-to-day and month-to-month cash. At Ally I have an online savings account and several one-year CDs with different maturity dates. If cash gets bloated, I invest some in my taxable account at Vanguard.


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Taylor Larimore
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Re: Where do you keep your Emergency Funds? How is it invested?

Post by Taylor Larimore » Thu Jan 09, 2020 8:18 pm

LookinAround wrote:
Thu Jan 09, 2020 5:00 pm
More of a curiousity question...

I was wondering if people keep their emergency funds within or outside of their investment accounts? If I recall, when calculating investment portfolio totals they shouldn't include your Emergency Fund amount?'

If you keep your EF as an asset within an investment account then do you subtract it out each time you run a portfolio anlaysis tool? Seems kind of a pain? As also the investment account total you see in your tools would always be inflated. I guess you'd always have to mentally subtract emergency fund amount from what you see as a portfolio total.

So what do you do? And how what do you keep your EF in?
> CDs? What terms?
> Savings
> Other???
LookinAround:

I do not have an extra low-return "emergency" fund that I may never use. Some people may need a separate "emergency" fund, but I know that if an emergency occurs for me that I can get cash from my bank account, my credit card; my portfolio; a bank loan, or my family (a last resort).

Keep investing simple.

Best wishes
Taylor
Jack Bogle's Words of Wisdom: "Just remember: In investing, simplicity trumps complexity. Trust your own common sense."
"Simplicity is the master key to financial success." -- Jack Bogle

jeep5ter
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Re: Where do you keep your Emergency Funds? How is it invested?

Post by jeep5ter » Thu Jan 09, 2020 8:26 pm

A short term municipal bond fund. Tax free and allows limited check writing.

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SlowMovingInvestor
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Re: Where do you keep your Emergency Funds? How is it invested?

Post by SlowMovingInvestor » Thu Jan 09, 2020 8:42 pm

Honestly, the difference between a good MMF or a high yield account and short term bonds is so low these days, I just put it in MMF/high yield savings , so it's 'cash'

averagedude
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Re: Where do you keep your Emergency Funds? How is it invested?

Post by averagedude » Thu Jan 09, 2020 8:53 pm

In my opionion, emergency funds are overrated for the average boglehead. If you have plenty of assets due to a high savings rate, you can just borrow the money in case of an emergency. I was so stupid in my life to have a 12 month emergency fund just because I am so debt averse. This is coming from a couple who have stable jobs. If you have an unstable job, perhaps 6 months expenses is wise. I still have about 10 months of expenses (not smart) in an emergency fund, and I have it in CD's and a high yield savings account. I would had been much better off to have had my "emergency fund" 100% in stocks, because i have never had to use it over the past 25 years. If I had it to do over again, not knowing what life would throw at me, I would have 3 months of expenses in an intermediate bond fund.

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Re: Where do you keep your Emergency Funds? How is it invested?

Post by whodidntante » Thu Jan 09, 2020 8:56 pm

averagedude wrote:
Thu Jan 09, 2020 8:53 pm
In my opionion, emergency funds are overrated for the average boglehead. If you have plenty of assets due to a high savings rate, you can just borrow the money in case of an emergency. I was so stupid in my life to have a 12 month emergency fund just because I am so debt averse. This is coming from a couple who have stable jobs. If you have an unstable job, perhaps 6 months expenses is wise. I still have about 10 months of expenses (not smart) in an emergency fund, and I have it in CD's and a high yield savings account. I would had been much better off to have had my "emergency fund" 100% in stocks, because i have never had to use it over the past 25 years. If I had it to do over again, not knowing what life would throw at me, I would have 3 months of expenses in an intermediate bond fund.
Not many people can publicly admit mistakes. Thanks for sharing so others can learn.

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Re: Where do you keep your Emergency Funds? How is it invested?

Post by Hector » Thu Jan 09, 2020 9:00 pm

I don't have separate emergency fund.
I make sure not to let bond go below certain amount and if emergency comes, I will sell bonds.

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Re: Where do you keep your Emergency Funds? How is it invested?

Post by whodidntante » Thu Jan 09, 2020 9:03 pm

Taylor Larimore wrote:
Thu Jan 09, 2020 8:18 pm

I do not have an extra low-return "emergency" fund that I may never use. Some people may need a separate "emergency" fund, but I know that if an emergency occurs for me that I can get cash from my bank account, my credit card; my portfolio; a bank loan, or my family (a last resort).
Agreed. I fund unexpected spending the same way as expected spending. I see mainly downsides to complicating it.

flyphotoguy
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Re: Where do you keep your Emergency Funds? How is it invested?

Post by flyphotoguy » Thu Jan 09, 2020 9:04 pm

Savings, probably earning 2.x or whatever the range is for the online savings account.

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Re: Where do you keep your Emergency Funds? How is it invested?

Post by abuss368 » Thu Jan 09, 2020 9:09 pm

I do not have a separate "emergency fund". Rather we have cash in one checking account and cash in Vanguard Prime Money Market fund. The only thing that prevents us from simply keeping all cash in the checking account is risk of theft. The "what if". The yield is a secondary consideration.
John C. Bogle - Two Fund Portfolio: Total Stock & Total Bond. "Simplicity is the master key to financial success."

dukeblue219
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Re: Where do you keep your Emergency Funds? How is it invested?

Post by dukeblue219 » Thu Jan 09, 2020 9:09 pm

Our separate emergency fund is currently in Wellesley. Between various cash cushions (essentially the float we have earmarked in the budget for other regular expenses) and credit cards we can easily go a month without tapping into that fund, so it doesn't bother me to be less liquid than a savings or checking account would offer.

Emergency fund philosophies vary, but for us it's mostly an intermediate term safety net so we don't need to sell "real" investments if things go bad. I cant imagine too many scenarios in which we need immediate cash access to several months worth of expenses.

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Re: Where do you keep your Emergency Funds? How is it invested?

Post by Ferdinand2014 » Thu Jan 09, 2020 9:10 pm

Treasury bills purchased directly through Fidelity at auction on auto-roll in my brokerage account. It is my only fixed income and I include it in my total portfolio. I do not have an asset allocation percent. I keep 2 years expenses and everything else is invested in FXAIX (Fidelity 500 index fund) 0.015 expense ratio. I am self employed and appreciate a large cushion of highly liquid investments.
Last edited by Ferdinand2014 on Thu Jan 09, 2020 9:13 pm, edited 1 time in total.
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Re: Where do you keep your Emergency Funds? How is it invested?

Post by Sandtrap » Thu Jan 09, 2020 9:12 pm

Fed Money Market
Fed Treasury Funds
CD Ladders
Bank

j :D
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Re: Where do you keep your Emergency Funds? How is it invested?

Post by abuss368 » Thu Jan 09, 2020 9:14 pm

Trader Joe wrote:
Thu Jan 09, 2020 5:32 pm
I keep my emergency fund in the Vanguard Prime Money Market Fund (VMMXX) and I am very happy.
:sharebeer

Simple and effective.
John C. Bogle - Two Fund Portfolio: Total Stock & Total Bond. "Simplicity is the master key to financial success."

dru808
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Re: Where do you keep your Emergency Funds? How is it invested?

Post by dru808 » Thu Jan 09, 2020 9:24 pm

Faerris wrote:
Thu Jan 09, 2020 5:27 pm
We have 100% of our emergency fund (6mo + 25%) invested in the Vanguard Tax-Managed Balanced (VTMFX) fund. We have the 25% buffer in place to account for any dips in the market.

This last year, we were able to use the gains realized in the account to help fund a car down-payment with minimal tax implications (due to long term capital gains). It's since gained back that withdrawal and then some. Needless to say, we love using this account for our EF!
Interesting, I’ve wondered about this fund for “general” savings per say. Is there distribution fee with this fund?

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Re: Where do you keep your Emergency Funds? How is it invested?

Post by HawkeyePierce » Thu Jan 09, 2020 9:24 pm

In the case of emergency funds, I think the "sleep at night" factor is more important than any other. If you have enough assets that you're comfortable drawing on investments when needed, fine. If you sleep better with $50k in a savings account, that's fine too.

Long ago I decided that keeping six months living expenses in cash is where I'm most comfortable. I'm not bothered that it's not the most optimal use of my money.

Normchad
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Re: Where do you keep your Emergency Funds? How is it invested?

Post by Normchad » Thu Jan 09, 2020 9:26 pm

All of mine is at Vanguard in VMMXX. I just consider it a normal part of my portfolio. So my real asset allocation is s omething like 65/35/5, where the 5 is VMMXX and other cash-like things.

I’ve had an emergency fund now for two decades. Luckily, I’ve never had an emergency that required me to tap it. At times, I have considered my Roth IRA to be part of the EF since it is money that is available if things really get dicey.

People seem to forget that the emergency you might be dealing with is a severe recession, that causes job loss, causes banks to stop lending, and causes non-cash assets to lose a lot of value. That’s why I keep cash and VMMXX. And after years like 2019, I regret it wasn’t in the stick market instead.

dru808
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Re: Where do you keep your Emergency Funds? How is it invested?

Post by dru808 » Thu Jan 09, 2020 9:29 pm

Checking account 1-2 months

Bsv for the rest of “savings”, it’s got a years worth if one of us were unemployed and really bit down on budgeting. we don’t categorize it as an emergency fund.

kimura king
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Re: Where do you keep your Emergency Funds? How is it invested?

Post by kimura king » Thu Jan 09, 2020 9:36 pm

Money market account, I think 1.7%.

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Re: Where do you keep your Emergency Funds? How is it invested?

Post by Jack FFR1846 » Thu Jan 09, 2020 9:48 pm

Savings bonds.

I do count it also as part of my AA.
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lostdog
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Re: Where do you keep your Emergency Funds? How is it invested?

Post by lostdog » Thu Jan 09, 2020 9:56 pm

How big does brokerage account holding a tax efficient stock index need to be in order to validate that you don't need to hold a cash emergency fund?
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crinkles2
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Re: Where do you keep your Emergency Funds? How is it invested?

Post by crinkles2 » Thu Jan 09, 2020 10:02 pm

I keep ours in our checking account...

1. I use YNAB to allocate spare cash for emergency
2. Our checking account offsets mortgage interest, so our cash is effectively earning 3.35% (although it is in avoided mortgage interest).

Triple digit golfer
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Re: Where do you keep your Emergency Funds? How is it invested?

Post by Triple digit golfer » Thu Jan 09, 2020 10:04 pm

lostdog wrote:
Thu Jan 09, 2020 9:56 pm
How big does brokerage account holding a tax efficient stock index need to be in order to validate that you don't need to hold a cash emergency fund?
I would say twice the size of what the desired emergency fund amount is. This allows for a 50% market drop.

We stopped holding a dedicated emergency fund once our taxable stock index investments grew large enough where I was comfortable. In an emergency, even a 50% drop, we would sell the taxable equities and exchange the same amount in a retirement account from bonds to equities.

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Re: Where do you keep your Emergency Funds? How is it invested?

Post by abuss368 » Thu Jan 09, 2020 10:15 pm

Another positive of having a separate and stable cash account is when applying for a mortgage. A few years ago when we purchased our new home we only had to disclose the money market fund. We were able to avoid disclosing the portfolio. The broker said they did not need it as the money market account only was fine. I learned another perspective of the old saying "cash is king".
John C. Bogle - Two Fund Portfolio: Total Stock & Total Bond. "Simplicity is the master key to financial success."

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Re: Where do you keep your Emergency Funds? How is it invested?

Post by Triple digit golfer » Thu Jan 09, 2020 10:17 pm

abuss368 wrote:
Thu Jan 09, 2020 10:15 pm
Another positive of having a separate and stable cash account is when applying for a mortgage. A few years ago when we purchased our new home we only had to disclose the money market fund. We were able to avoid disclosing the portfolio. The broker said they did not need it as the money market account only was fine. I learned another perspective of the old saying "cash is king".
How did not disclosing it benefit you?

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Re: Where do you keep your Emergency Funds? How is it invested?

Post by abuss368 » Thu Jan 09, 2020 10:18 pm

Cash may be more important for a retiree than someone in the accumulating years.
John C. Bogle - Two Fund Portfolio: Total Stock & Total Bond. "Simplicity is the master key to financial success."

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Re: Where do you keep your Emergency Funds? How is it invested?

Post by abuss368 » Thu Jan 09, 2020 10:18 pm

Triple digit golfer wrote:
Thu Jan 09, 2020 10:17 pm
abuss368 wrote:
Thu Jan 09, 2020 10:15 pm
Another positive of having a separate and stable cash account is when applying for a mortgage. A few years ago when we purchased our new home we only had to disclose the money market fund. We were able to avoid disclosing the portfolio. The broker said they did not need it as the money market account only was fine. I learned another perspective of the old saying "cash is king".
How did not disclosing it benefit you?
Was able to keep the portfolio private.
John C. Bogle - Two Fund Portfolio: Total Stock & Total Bond. "Simplicity is the master key to financial success."

Blue456
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Re: Where do you keep your Emergency Funds? How is it invested?

Post by Blue456 » Thu Jan 09, 2020 10:23 pm

abuss368 wrote:
Thu Jan 09, 2020 10:18 pm
Triple digit golfer wrote:
Thu Jan 09, 2020 10:17 pm
abuss368 wrote:
Thu Jan 09, 2020 10:15 pm
Another positive of having a separate and stable cash account is when applying for a mortgage. A few years ago when we purchased our new home we only had to disclose the money market fund. We were able to avoid disclosing the portfolio. The broker said they did not need it as the money market account only was fine. I learned another perspective of the old saying "cash is king".
How did not disclosing it benefit you?
Was able to keep the portfolio private.
How is that a benefit?

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abuss368
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Re: Where do you keep your Emergency Funds? How is it invested?

Post by abuss368 » Thu Jan 09, 2020 10:24 pm

Blue456 wrote:
Thu Jan 09, 2020 10:23 pm
abuss368 wrote:
Thu Jan 09, 2020 10:18 pm
Triple digit golfer wrote:
Thu Jan 09, 2020 10:17 pm
abuss368 wrote:
Thu Jan 09, 2020 10:15 pm
Another positive of having a separate and stable cash account is when applying for a mortgage. A few years ago when we purchased our new home we only had to disclose the money market fund. We were able to avoid disclosing the portfolio. The broker said they did not need it as the money market account only was fine. I learned another perspective of the old saying "cash is king".
How did not disclosing it benefit you?
Was able to keep the portfolio private.
How is that a benefit?
A personal preference.
John C. Bogle - Two Fund Portfolio: Total Stock & Total Bond. "Simplicity is the master key to financial success."

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watchnerd
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Re: Where do you keep your Emergency Funds? How is it invested?

Post by watchnerd » Thu Jan 09, 2020 11:50 pm

LookinAround wrote:
Thu Jan 09, 2020 5:00 pm

If you keep your EF as an asset within an investment account then do you subtract it out each time you run a portfolio anlaysis tool?
Cash equivalents / short term reserves are part of our AA. It comes out of the short end of our bond barbell. The difference in backtesting CAGR between short TIPS / money market funds is miniscule.

It doubles as both emergency fund and working capital fund.

We don't need to subtract it from portfolio analysis tools because I set the tool to include a % to short term reserves.
70% Global Market Weight Equities | 15% Long Treasuries 15% short TIPS & cash || RSU + ESPP

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RootSki
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Re: Where do you keep your Emergency Funds? How is it invested?

Post by RootSki » Fri Jan 10, 2020 12:57 am

I also don’t keep a distinct EF. In case of an emergency, I look for the least tax impacting lots and sell enough to buy my way out of the emergency. There are thousands to choose from. I’d do the same in a long term emergency too. I don’t keep a whole lot of liquid savings either for the same reason. It only takes a day (overnight really) for MF trades to settle out.

vipertom1970
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Re: Where do you keep your Emergency Funds? How is it invested?

Post by vipertom1970 » Fri Jan 10, 2020 1:01 am

I keep my 2 years emergency $$ in ladder CD but I do not count it as part of my over all AA.

WannabeBogleHead01
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Re: Where do you keep your Emergency Funds? How is it invested?

Post by WannabeBogleHead01 » Fri Jan 10, 2020 5:43 am

Another fan of Vanguard Money Market Fund. Roughly 3-4 months worth.

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Stef
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Re: Where do you keep your Emergency Funds? How is it invested?

Post by Stef » Fri Jan 10, 2020 6:13 am

5k cash, everything else in stocks.

I have a very stable job situation and good insurances, so nothing to worry (at least nothing I can think of). If an emergency would exceed my cash reserve, I would first try to cover it with my credit card or monthly savings rate, then sell stocks.

It's just much more likely that this way I'll end up with a higher net worth than keeping 6-12 monthly expenses in cash or bonds.

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spdoublebass
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Re: Where do you keep your Emergency Funds? How is it invested?

Post by spdoublebass » Fri Jan 10, 2020 6:17 am

This thread is interesting.

I have a question that I know is just mental accounting, but it still bugs me.

I'm going to pick numbers randomly.

Say you have $120K in your 401K. You want an 80/20 AA. So you have $24K in bonds the rest is in Stock.
However, you have an emergency fund of $20K all invested safely.

If you ignore the EF and just don't consider it part of your AA, that's fine, but overall you do have $140K with $44K invested in bonds, which would be about a 69/31 AA.

I know some people include their EF in their portfolio, but my question is how? Specifically how would you with the above example. I think with large portfolios, things can really be different that with the above portfolio.
Would you hold your $20K as your EF, then have another $8K in Bonds in your 401K with the rest in stock? This would give you $28K in bonds which is 20% of $140K to put you at your 80/20 AA.

I know this is splitting hairs, but I am curious.
I'm trying to think, but nothing happens

Blue456
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Re: Where do you keep your Emergency Funds? How is it invested?

Post by Blue456 » Fri Jan 10, 2020 7:21 am

Stef wrote:
Fri Jan 10, 2020 6:13 am
5k cash, everything else in stocks.

I have a very stable job situation and good insurances, so nothing to worry (at least nothing I can think of). If an emergency would exceed my cash reserve, I would first try to cover it with my credit card or monthly savings rate, then sell stocks.

It's just much more likely that this way I'll end up with a higher net worth than keeping 6-12 monthly expenses in cash or bonds.
Like you I invest as well. For me I keep my AA in taxable at Wellesley fund and I sleep well on it. You really do loose money to high yield savings accounts, bonds and cash and I think a lot of people don't incorporate inflation into the equation.

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