I think most have recommended a bank money market fund or a money-market bond fund like VMMXX.
SoupNazi2001 said:RockOn said:
I think most have recommended a bank money market fund or a money-market bond fund like VMMXX.
Yes many did but many also got lured into thinking stocks can't go down so I will get extra returns out of it.
SoupNazi2001 said:TXTransplant said:
I had about 1/3 of my cash savings in a few mutual funds that I first opened about 6 years ago. I've lost about 25%, but I still haven't dropped below the principle that I invested. Haven't pulled anything out (yet) and I'm holding my breath it will stay above that threshold.
The rest is in a "high yield" (1.5% - ha!) savings accounts and my HSA (which I did pull out of some bond funds and into cash).
You haven't dropped below the principal because you invested 6 years ago. If you invested it in the last couple of years you would be underwater and there is still a relatively high chance we could go much lower. If that coincides with a job loss, that is the problem. Not worth the risk in my opinion unless you overfund the emergency fund to handle a potential loss.
Here's one what? I must be missing something.SoupNazi2001 said:
Here is one for you, got the most stars in the thread.
https://texags.com/forums/57/topics/3089771/replies/55840960
SoupNazi2001 said:nactownag said:
Also a good example for why paying down debt makes sense. A nice pile of cash and less debt makes a crisis less scary financially
Agreed, paying down mortgage debt has also been chastised here for years because of you know, math, at least not exponential math though.
SoupNazi2001 said:John Francis Donaghy said:SoupNazi2001 said:nactownag said:
Also a good example for why paying down debt makes sense. A nice pile of cash and less debt makes a crisis less scary financially
Agreed, paying down mortgage debt has also been chastised here for years because of you know, math, at least not exponential math though.
Times like these are exactly why I don't pay extra towards my mortgage. I'd much rather have the cash to draw on in times of need than a mortgage with a lower balance.
It depends on how you did it. If you allocated extra money to your mortgage over the year's, but still invested and still maintained sufficient liquidity for an emergency fund, in times like this it feels good to be debt free.
SoupNazi2001 said:
Here is one for you, got the most stars in the thread.
https://texags.com/forums/57/topics/3089771/replies/55840960
SoupNazi2001 said:
Many people over the last 10 years have worried about their emergency fund not earning hardly any interest with many advocating investing it in stocks. This market and situation is Exhibit A on why you don't focus on returns for an emergency fund and have at least 3-6 months worth of expenses. Losing your job sucks enough, losing 25%+ of your emergency funds is just an additional kick in the nuts..
RockOn said:
From casual observation, those that seek return on an emergency fund have 2 related issues working against them.
1 - too high of monthly expenses ($5,000/mo x 6 = $30,000 vs. $1,200/mo x 6 = $7,200)
2. - too low of savings rate. With a savings rate of 75% you can build a 6 month emergency fund in 2 months of earnings. At that point, who cares what you earn on it over a year?
After 2 months of working, the rest goes in to investments. Then at the end of that first year you have 5.2x your emergency fund in investments.
nactownag said:
Also a good example for why paying down debt makes sense. A nice pile of cash and less debt makes a crisis less scary financially
Well, I think emergency plans take into account minimum needed to survive while changing habits. For an individual that would be things like eating out, buying new clothes, whatever. For a business, you cut spending so your reserves get you through. That is often done by cutting the cost of people.hypeiv said:
Is an emergency fund only for personal finances or should small businesses have one too... Seems like a bunch couldnt make it make past a few weeks much less 3-6 months.