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

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

Post by carmonkie » Sat Jan 11, 2020 2:15 am

We just got to our goal which was one year worth of expenses. 9 months split 50/50 between Prime MM and Vanguard Short Term Corp Bond, 3 months in VT. This allocation ends up being about 85% Bonds/15% stock. The EF is not part of our AA and just a fixed amount. So far so good. I think I can go 80/20 as we stash more in other accounts. We re-invest dividends.

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

Post by octreotide » Sat Jan 11, 2020 3:32 am

Hybrid cash savings and no penalty CDs.

The no penalty cds give me a higher rate than the banks savings, protection from rate drops (3 back to back last year!), and i can redeem when ever with full interest accumulated, no penalty. That last part is important to me b/c I don't know when an emergency will come. Front line defense is a cash balance one because I can't add more to CDs once established and two, first line of defense.

I've been at ally, still thing their good, but I'll be moving the non CD cash position over to Alliant. I'm not one to chase just a couple basis points but this one is .08 higher and getting that account was a side effect of my real engagement with Alliant to get their 3% cash back card. I'm currently on a cash back CC reward strategy. It's a credit union so you have to be a member and checking/savings was just what you get when you sing up.

Overall my cash position (lumping in daily checking as well) is about 3% overall investable asset portfolio.

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

Post by mortfree » Sat Jan 11, 2020 5:03 am

I don’t have an emergency fund.

But I do have close to 60k cash, most of it is at Capital One

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

Post by mancich » Sat Jan 11, 2020 5:13 am

18 months of expenses split between Ally and CapitalOne online banking. Roughly 1.5% is good enough, and it is very liquid.

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

Post by KlangFool » Sat Jan 11, 2020 8:26 am

Stef wrote:
Sat Jan 11, 2020 2:05 am
KlangFool wrote:
Fri Jan 10, 2020 5:43 pm
I save 1 year of expense every year. I can reach my number with a 0% real return. There is an insignificant benefit for me to invest in my emergency fund. So, I kept 1 year of the emergency fund.

Are you gambling on something that even if you are right that the benefit is so insignificant that it won't matter? That is the question.

KlangFool
Dear KlangFool

I can't reach my number with 0% real return because I save 1 year of expenses in 2 years. So after 36 years of saving and turning 65, I would have 18 years of expenses saved. I need 3.6% real return to end up with 36 years of expenses saved after 36 years.

So there is a risk of not having enough for me which you don't have. Leaving 25k (or whatever) in cash and missing out on 100-200k gains till retirement is significant enough for me to take the bet.
Stef,

That is the wrong way to think about this.

The correct way is

The difference between investing the 25K is whether the final portfolio will be 5 million versus 5.1 million. So, does that final 100K matter? The answer would be no. It is at 2%.

My portfolio is at 1.4 million now. My emergency fund is 90K (1 1/2 year). It is insignificant. When I started working long ago, my gross income was about 30K and my emergency fund was 10K (1 year). It was insignificant to invest that 10K.

When your portfolio is small, 100K to 200K matter. After 36 years, 100K to 200K no longer matters.

<<So after 36 years of saving and turning 65, I would have 18 years of expenses saved. I need 3.6% real return to end up with 36 years of expenses saved after 36 years.>>

I do not use real return rate. I use the nominal return rate. My annual expense does not change based on the inflation rate. I do "Pay Yourself First". My annual expense is based on how much I want to spend every year. If you use "Pay Yourself First", your annual expense would not increase base on the inflation rate.

KlangFool

Index24
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Re: Where do you keep your Emergency Funds? How is it invested?

Post by Index24 » Sat Jan 11, 2020 9:35 am

whodidntante wrote:
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.
+1

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

Post by GoldPressedLatinum » Sat Jan 11, 2020 10:10 am

fortfun wrote:
Fri Jan 10, 2020 5:56 pm
Any leads on new bonuses?
PM'd

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

Post by Razasharpz » Sat Jan 11, 2020 3:15 pm

Emergency funds are in a straight up checking and savings account like they should be if we're talking about a "real-emergency".
Age 31: | 70% VTSAX | 20% VTIAX | 10% VBTLX

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

Post by Triple digit golfer » Sat Jan 11, 2020 3:30 pm

In my opinion, an investor with a taxable account that is double the desired emergency amount (regardless of what it holds) AND who holds bonds at least in the emergency amount (whether in a tax advantaged or taxable account) doesn't need to segregate a separate emergency fund.

I follow the principles in this well known wiki for my emergency fund:

https://www.bogleheads.org/wiki/Placing ... ed_account

I do keep a couple months of expenses in my savings account, just for convenience. I also add to this as sort of a sinking fund for large purchases like home maintenance, our next vehicles, etc. We don't plan on buying a vehicle for the next five plus years, so the savings will grow to an additional $12-15k over the next five years. I am not sure if there's a better way to save for a purchase 5-6 years down the road.

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

Post by kimura king » Sun Jan 12, 2020 10:20 am

I have a question.

I have an old Roth 401k from an old job I left last summer. When I left the job Transamerica moved changed it to 100% bonds and is charging me like a $12 montly maintenance fee on this old Roth 401k with like $4800 in it. I mailed transamerica the paperwork to re-allocate it but they didn't do it and when I called pretty much recommended I close the account.

Should I move it to a taxable account? Like a Fidelity s&p 500 fund with zero fee's and consider it part of emergency fund or a backup account for other expenses?

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

Post by TBL_IA » Sun Jan 12, 2020 10:25 am

kimura king wrote:
Sun Jan 12, 2020 10:20 am
I have a question.

I have an old Roth 401k from an old job I left last summer. When I left the job Transamerica moved changed it to 100% bonds and is charging me like a $12 montly maintenance fee on this old Roth 401k with like $4800 in it. I mailed transamerica the paperwork to re-allocate it but they didn't do it and when I called pretty much recommended I close the account.

Should I move it to a taxable account? Like a Fidelity s&p 500 fund with zero fee's and consider it part of emergency fund or a backup account for other expenses?
Consider rolling this over to a Roth IRA.

L82GAME
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Re: Where do you keep your Emergency Funds? How is it invested?

Post by L82GAME » Sun Jan 12, 2020 10:26 am

kimura king wrote:
Sun Jan 12, 2020 10:20 am
I have a question.

I have an old Roth 401k from an old job I left last summer. When I left the job Transamerica moved changed it to 100% bonds and is charging me like a $12 montly maintenance fee on this old Roth 401k with like $4800 in it. I mailed transamerica the paperwork to re-allocate it but they didn't do it and when I called pretty much recommended I close the account.

Should I move it to a taxable account? Like a Fidelity s&p 500 fund with zero fee's and consider it part of emergency fund or a backup account for other expenses?
Why not open a ROTH IRA with a brokerage like Vanguard and do a ROTH to ROTH transfer? Don’t move from a tax advantaged account to a Taxable account. Then invest inside the ROTH IRA.

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

Post by ruralavalon » Sun Jan 12, 2020 11:10 am

kimura king wrote:
Sun Jan 12, 2020 10:20 am
I have a question.

I have an old Roth 401k from an old job I left last summer. When I left the job Transamerica moved changed it to 100% bonds and is charging me like a $12 montly maintenance fee on this old Roth 401k with like $4800 in it. I mailed transamerica the paperwork to re-allocate it but they didn't do it and when I called pretty much recommended I close the account.

Should I move it to a taxable account? Like a Fidelity s&p 500 fund with zero fee's and consider it part of emergency fund or a backup account for other expenses?
Do NOT move this to a taxable account, which would create income tax liability. Do a rollover to a Roth IRA at a low cost provider like Vanguard or Fidelity.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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

Post by kimura king » Sun Jan 12, 2020 11:30 am

thanks for the replies, my bad, I forgot to mention that my new employer has a simple IRA.

Since I already have a simple IRA I cannot open up a roth. My wife only has a 401k and I was going to open a backdoor roth for her within the next month or so.

On the phone transamerica said I could leave it in the current account, but would only be able to keep it in 0.1% bonds. Or I could roll it over into a taxable IRA, either with transamerica or someone else. Could take the hit and cash it out and put it on my house. It has been a frustrating situation and wish I never did the roth 401k in the first place.

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

Post by MDfan » Sun Jan 12, 2020 11:37 am

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.
We have never had one, either. Just checking and savings and our retirement accounts. And I've never had an expense in my 58 years that I would consider a true emergency (maybe we're just lucky). We have enough money in our investment accounts that I could pull money if I really needed to. Or I could juts use a credit card until I was able to get my hands on some money. Most expenses (like bigger car repairs, home repairs, etc.), we just pay as they come up.

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

Post by TBL_IA » Sun Jan 12, 2020 11:47 am

kimura king wrote:
Sun Jan 12, 2020 11:30 am
thanks for the replies, my bad, I forgot to mention that my new employer has a simple IRA.

Since I already have a simple IRA I cannot open up a roth. My wife only has a 401k and I was going to open a backdoor roth for her within the next month or so.

On the phone transamerica said I could leave it in the current account, but would only be able to keep it in 0.1% bonds. Or I could roll it over into a taxable IRA, either with transamerica or someone else. Could take the hit and cash it out and put it on my house. It has been a frustrating situation and wish I never did the roth 401k in the first place.
Please see link

https://www.irs.gov/retirement-plans/re ... tributions

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

Post by AerialWombat » Sun Jan 12, 2020 12:00 pm

I combine my EF and savings for next house down payment and currently just hold it in Vanguard Prime Money Market Fund (VMMXX). I do consider it part of my AA.
“Life doesn’t come with a warranty.” -Michael LeBoeuf

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

Post by kimura king » Sun Jan 12, 2020 12:03 pm

excellent, looks like I can roll it over into a backdoor! That is what I will do.

from that link - "Yes, you can contribute to a traditional and/or Roth IRA even if you participate in an employer-sponsored retirement plan (including a SEP or SIMPLE IRA plan)."

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

Post by TBL_IA » Sun Jan 12, 2020 12:26 pm

kimura king wrote:
Sun Jan 12, 2020 12:03 pm
excellent, looks like I can roll it over into a backdoor! That is what I will do.

from that link - "Yes, you can contribute to a traditional and/or Roth IRA even if you participate in an employer-sponsored retirement plan (including a SEP or SIMPLE IRA plan)."
Kimura King - I’m not 100% sure but you may not need to do a Backdoor since this is a “rollover” and not a “contribution”.

Someone with more knowledge may know.

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

Post by climber2020 » Tue Jan 14, 2020 4:23 pm

LookinAround wrote:
Fri Jan 10, 2020 4:46 pm
climber2020 wrote:
Thu Jan 09, 2020 5:06 pm
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 like that idea.

But what % stock/bond do you keep in taxable that you would want to sell from a tax advantaged acct? I have a large taxable acct also at about a 60/40 split in favor of stocks (I'm retired). I'd have sufficient bond funds in my taxable account to sell off in an emergency and avoid taking income by selling bonds from my tax advantaged accounts. Looking back at the crash of 2009 looks like Van Total Bond only fell about 10%.
My taxable account is all stocks. All my bonds are in my tax deferred account.

If I needed $5000 during a big downturn, I'd sell $5000 from my stock funds in taxable and the same day exchange $5000 from bonds to stocks in my 401k. I don't have to withdraw anything from my tax deferred account at that moment, and my overall stock position remains unchanged.

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

Post by bluerafters » Fri Jan 17, 2020 9:31 pm

I do not have the means nor the amounts of the above posters in this thread. Building an emergency fund is on the list of items to accomplish in 2020. (Fully funding the HSA, now finished with my last paycheck in January, is always first.) Fascinating to see the differing approaches to the topic as posted above.

I scraped together enough for the $3,000 entry into VMMXX and was going to open it this February. My plan was to guide it to $5,000 and convert into VMRXX by 2020 years end.

At the end of 2020:

$1500 Checking
$1000 HSA (savings)
$5,000 VMRXX

Roth IRA, 401k and HSA (investment) all working in the background.

I do count the EF as part of my AA. I am open to better suggestions as the plan is adaptable to change.

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

Post by SovereignInvestor » Sat Jan 18, 2020 4:10 am

Stef wrote:
Sat Jan 11, 2020 2:05 am
KlangFool wrote:
Fri Jan 10, 2020 5:43 pm
I save 1 year of expense every year. I can reach my number with a 0% real return. There is an insignificant benefit for me to invest in my emergency fund. So, I kept 1 year of the emergency fund.

Are you gambling on something that even if you are right that the benefit is so insignificant that it won't matter? That is the question.

KlangFool
Dear KlangFool

I can't reach my number with 0% real return because I save 1 year of expenses in 2 years. So after 36 years of saving and turning 65, I would have 18 years of expenses saved. I need 3.6% real return to end up with 36 years of expenses saved after 36 years.

So there is a risk of not having enough for me which you don't have. Leaving 25k (or whatever) in cash and missing out on 100-200k gains till retirement is significant enough for me to take the bet.
Based on current FI rates. On average equity investments if they give historical average return of 6.5% inflation adjusted annual returns would double in 12 years.

Short term reserves at under 2% get about 0% real return.

So if we assume worse case scenario if one doesn't keep emergency funds safe...but has them in taxable account stocks is when they need them it is during 50% crash in stocks and they lose 50%?

But if 12 years go by and the EF in stocks isn't needed then on average what would be the EF in stocks would double relative to the same EF in short term reserves so the breakeven is going 12 years without needing them.

If one has EF in taxable stocks and goes 24 years without needing them and then needs them all in 50% crash....and loses 50%..the EF would be 4x great relative to one in reserves for 24 years so even after 50% loss from needing them in a crash, it still is 2x greater than EF in reserves.

Under these assumptions...one would ask if they have expected probability of needing all EF of less than one in 12, AND and this need being during a severe market crash Depending on job security, age, dependents, health etc. The probability of that is likely no where near 1 in 12 years that other market is severely depressed AND someone needs entire EF.

Personally I keep 3 months liquid reserves and favor having other 9 months in equities for that reason.

But if someone loses sleep over not having EF liquid then that's different.

1130Super
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Re: Where do you keep your Emergency Funds? How is it invested?

Post by 1130Super » Sat Jan 18, 2020 5:35 am

2-3 months expenses checking account
About 2 months expenses in physical cash in safe
3-4 months expenses in savings account
80 shares of BRK.B in taxable (the plan is to not ever need to use this) every once in a while I Buy 5 shares

Someone is going to ask why I keep some physical cash. You never know when a natural disaster or major power outage could happen

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

Post by DameTime » Sat Jan 18, 2020 7:41 am

My conclusion reading through this thread is that there are many ways to skin a cat. Even the definition of emergency is quite variable between posters, as some mention employment income as an emergency resource. What if the “emergency” was an unexpected layoff? That certainly came to fruition in 2008 for many people at a time when the markets were also pounding sand.

For those investing their EF in equities: if the market is tanking at the same time you need funds, is selling lots at a large loss for emergency capital perhaps easier said than done?

Many great points all around, and definitely some thought provoking ideas. Like many things around here, it seems to boil down to risk tolerance/adversion and whatever helps each of us sleep well at night.

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

Post by livesoft » Sat Jan 18, 2020 7:54 am

DameTime wrote:
Sat Jan 18, 2020 7:41 am
For those investing their EF in equities: if the market is tanking at the same time you need funds, is selling lots at a large loss for emergency capital perhaps easier said than done?
I love selling equities for a loss. I love to do tax-loss harvesting. Whether equities have a loss or not will not change just because I sell them or don't sell them.

But at the same time, I would be buying back similar equities by selling my bond funds to buy equity funds. I would do this even if I didn't have any emergency that I needed some more money to get me through. Astute folks will realize that I would not be in 100% equities for my entire portfolio. See also https://www.bogleheads.org/wiki/Placing ... ed_account one more time.
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DameTime
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Re: Where do you keep your Emergency Funds? How is it invested?

Post by DameTime » Sat Jan 18, 2020 8:24 am

livesoft wrote:
Sat Jan 18, 2020 7:54 am
DameTime wrote:
Sat Jan 18, 2020 7:41 am
For those investing their EF in equities: if the market is tanking at the same time you need funds, is selling lots at a large loss for emergency capital perhaps easier said than done?
I love selling equities for a loss. I love to do tax-loss harvesting. Whether equities have a loss or not will not change just because I sell them or don't sell them.

But at the same time, I would be buying back similar equities by selling my bond funds to buy equity funds. I would do this even if I didn't have any emergency that I needed some more money to get me through. Astute folks will realize that I would not be in 100% equities for my entire portfolio. See also https://www.bogleheads.org/wiki/Placing ... ed_account one more time.
Thank you, that’s great food for thought. You’re right that if you can swing it, selling at a loss and TLH while rebalancing between accounts is probably advantageous to selling above basis and paying gains taxes.

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

Post by Blue456 » Sat Jan 18, 2020 8:27 am

DameTime wrote:
Sat Jan 18, 2020 7:41 am
My conclusion reading through this thread is that there are many ways to skin a cat. Even the definition of emergency is quite variable between posters, as some mention employment income as an emergency resource. What if the “emergency” was an unexpected layoff? That certainly came to fruition in 2008 for many people at a time when the markets were also pounding sand.

For those investing their EF in equities: if the market is tanking at the same time you need funds, is selling lots at a large loss for emergency capital perhaps easier said than done?
I keep 66% of my assets liquid in HYS and CDs so those would be easy to sell. If there is large drop like in 2008, I look at what long term loss I would get in 100% HYS vs spread out between HYS/CDs and Equities. Keeping 100,000 in FDIC insured HYS account, would incur $11,500 loss over period of 10 years. I picked a Wellesley fund and I looked at it's worst drop in 2008 and it was 18%. I keep only 33% of my savings in Wellesley which means I would have lost 6% of my total assets during the worst time of 2008 recession which would still leave me at $94,000 instead of $88,500 (assuming that I got zero total growth from Wellesley fund).
This is kind of similar math I do for deducible for cash insurance. I keep mine at $1,000 because the premium on $500 or $100 is too high. For me the loss to inflation is too high in relation to chance of loss of job. Even more so the chance that I will loose job at the time of market crash is even lower as I am in health care field and in high demand. I will probably re-evaluate my risk down the road.

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

Post by lexor » Sat Jan 18, 2020 11:29 am

Blue456 wrote:
Sat Jan 18, 2020 8:27 am
DameTime wrote:
Sat Jan 18, 2020 7:41 am
My conclusion reading through this thread is that there are many ways to skin a cat. Even the definition of emergency is quite variable between posters, as some mention employment income as an emergency resource. What if the “emergency” was an unexpected layoff? That certainly came to fruition in 2008 for many people at a time when the markets were also pounding sand.

For those investing their EF in equities: if the market is tanking at the same time you need funds, is selling lots at a large loss for emergency capital perhaps easier said than done?
I keep 66% of my assets liquid in HYS and CDs so those would be easy to sell. If there is large drop like in 2008, I look at what long term loss I would get in 100% HYS vs spread out between HYS/CDs and Equities. Keeping 100,000 in FDIC insured HYS account, would incur $11,500 loss over period of 10 years. I picked a Wellesley fund and I looked at it's worst drop in 2008 and it was 18%. I keep only 33% of my savings in Wellesley which means I would have lost 6% of my total assets during the worst time of 2008 recession which would still leave me at $94,000 instead of $88,500 (assuming that I got zero total growth from Wellesley fund).
This is kind of similar math I do for deducible for cash insurance. I keep mine at $1,000 because the premium on $500 or $100 is too high. For me the loss to inflation is too high in relation to chance of loss of job. Even more so the chance that I will loose job at the time of market crash is even lower as I am in health care field and in high demand. I will probably re-evaluate my risk down the road.
Why are you keeping so much in cash?

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

Post by JoMoney » Sat Jan 18, 2020 11:34 am

I use Series I Savings Bonds and a government money market fund.
Lately I've been rethinking my use of savings bonds, and the relatively trivial benefit vs just simplifying it all into just using a government money market fund.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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

Post by Blue456 » Sat Jan 18, 2020 11:45 am

lexor wrote:
Sat Jan 18, 2020 11:29 am
Why are you keeping so much in cash?
I am not. But $100,000 is a good number to illustrate my point. We are still rebuilding our emergency fund. Our goal is probably around $60,000 for comfortable 2 years of expenses.

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

Post by dru808 » Sat Jan 18, 2020 3:08 pm

Couple thousand in physical cash $1 bills and a few thousand in change. Always use bills to buy, never use change, never use $1 bills. Easiest way to build up an emergency fund without even thinking about it.

index2max
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Re: Where do you keep your Emergency Funds? How is it invested?

Post by index2max » Sat Jan 18, 2020 3:09 pm

lakpr wrote:
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.
I was thinking of signing up for their rewards checking account too.

FYI, if it's not an account you use regularly and you're just parking money there for the higher interest rate, you can easily do $0.01 transactions apiece to meet their requirement. One of the call center reps I talked to said there are members of the credit union who do that all the time. I do that for one of my own high interest checking accounts too.

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

Post by watchnerd » Sat Jan 18, 2020 6:10 pm

bluerafters wrote:
Fri Jan 17, 2020 9:31 pm


I scraped together enough for the $3,000 entry into VMMXX and was going to open it this February. My plan was to guide it to $5,000 and convert into VMRXX by 2020 years end.

At the end of 2020:

$1500 Checking
$1000 HSA (savings)
$5,000 VMRXX
$5,000,000 minimum on VMRXX

https://investor.vanguard.com/mutual-fu ... view/vmrxx

Do you have access to it some unusual way?
70% Global Market Weight Equities | 15% Long Treasuries 15% short TIPS & cash || RSU + ESPP

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

Post by watchnerd » Sat Jan 18, 2020 6:14 pm

dru808 wrote:
Sat Jan 18, 2020 3:08 pm
Couple thousand in physical cash $1 bills and a few thousand in change. Always use bills to buy, never use change, never use $1 bills. Easiest way to build up an emergency fund without even thinking about it.
Sounds like a spare change jar.

That's not going to be much money, in terms of living expenses, is it?
70% Global Market Weight Equities | 15% Long Treasuries 15% short TIPS & cash || RSU + ESPP

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

Post by dru808 » Sat Jan 18, 2020 6:23 pm

watchnerd wrote:
Sat Jan 18, 2020 6:14 pm
dru808 wrote:
Sat Jan 18, 2020 3:08 pm
Couple thousand in physical cash $1 bills and a few thousand in change. Always use bills to buy, never use change, never use $1 bills. Easiest way to build up an emergency fund without even thinking about it.
Sounds like a spare change jar.

That's not going to be much money, in terms of living expenses, is it?
It’s over $6k and growing. It’s more than 3 months of mortgage payments. It’s my only emergency fund. I have money in bsv but don’t consider it an emergency fund more of a general savings fund.

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

Post by watchnerd » Sat Jan 18, 2020 6:25 pm

dru808 wrote:
Sat Jan 18, 2020 6:23 pm

It’s over $6k and growing. It’s more than 3 months of mortgage payments. It’s my only emergency fund. I have money in bsv but don’t consider it an emergency fund more of a general savings fund.
How long did it take to get to $6k?

$6k for us is about 6 weeks of living expense (everything -- food, property taxes, utilities, cell phone, eating out, etc,).
70% Global Market Weight Equities | 15% Long Treasuries 15% short TIPS & cash || RSU + ESPP

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

Post by dru808 » Sat Jan 18, 2020 6:34 pm

watchnerd wrote:
Sat Jan 18, 2020 6:25 pm
dru808 wrote:
Sat Jan 18, 2020 6:23 pm

It’s over $6k and growing. It’s more than 3 months of mortgage payments. It’s my only emergency fund. I have money in bsv but don’t consider it an emergency fund more of a general savings fund.
How long did it take to get to $6k?

$6k for us is about 6 weeks of living expense (everything -- food, property taxes, utilities, cell phone, eating out, etc,).
3 years +-, I don’t set money aside for emergencies explicitly, I have taxable savings/investments, lines of credit and a bunch of sellable items that would hold me over in an “emergency”. I’ve never had to tap into any of those. They would sustain my needs easily for a year.

I think some like to think of e funds as “a tire blew, better withdraw from my e fund”. I’ve just paid for unexpected expenses with money in checking. Mental accounting is my emergency fund.

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

Post by bluerafters » Sat Jan 18, 2020 6:54 pm

Yep. :oops:
watchnerd wrote:
Sat Jan 18, 2020 6:10 pm
bluerafters wrote:
Fri Jan 17, 2020 9:31 pm


I scraped together enough for the $3,000 entry into VMMXX and was going to open it this February. My plan was to guide it to $5,000 and convert into VMRXX by 2020 years end.

At the end of 2020:

$1500 Checking
$1000 HSA (savings)
$5,000 VMRXX
$5,000,000 minimum on VMRXX

https://investor.vanguard.com/mutual-fu ... view/vmrxx

Do you have access to it some unusual way?

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

Post by LookinAround » Sat Jan 18, 2020 7:41 pm

DameTime wrote:
Sat Jan 18, 2020 8:24 am
livesoft wrote:
Sat Jan 18, 2020 7:54 am
DameTime wrote:
Sat Jan 18, 2020 7:41 am
For those investing their EF in equities: if the market is tanking at the same time you need funds, is selling lots at a large loss for emergency capital perhaps easier said than done?
I love selling equities for a loss. I love to do tax-loss harvesting. Whether equities have a loss or not will not change just because I sell them or don't sell them.

But at the same time, I would be buying back similar equities by selling my bond funds to buy equity funds. I would do this even if I didn't have any emergency that I needed some more money to get me through. Astute folks will realize that I would not be in 100% equities for my entire portfolio. See also https://www.bogleheads.org/wiki/Placing ... ed_account one more time.
Thank you, that’s great food for thought. You’re right that if you can swing it, selling at a loss and TLH while rebalancing between accounts is probably advantageous to selling above basis and paying gains taxes.
As I understand it, you have to be careful just how "similar" the funds you're buying are to what you're selling for a loss. Even if you're selling in one account to take a loss while buying "similar" funds in another account, it's still considered a wash sale and the loss you're trying to take is disallowed.

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

Post by yogesh » Sat Jan 18, 2020 9:10 pm

3 months expenses in FDIC cash
Rest all invested per AA <signature>
Emergency: FDIC | Taxable: VTMFX | Retirement: TR2040

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