I think we're anticipating different levels of "emergency". Maybe, I might be wrong.

Yeah...

lol

The main thing with emergency money is you don't want to have to sell assets at low prices when you lose a job, like during 2008.

BND
BSV
SHY
VTEB

VCIT/VCLT too if you want to diversify w/corporate bonds.

I'm basically doing the exact thing that you're considering (can't stand the thought of money getting 0.1% or whatever, so I buy bond etf's and use them as an emergency fund bc they can be liquidated in ~5 business days), there's still swings obv, but nothing that isn't tolerable, even if I had to sell on a drop. which is exactly what you're talking about I think, it's an emergency fund, I don't plan on ever using it...

A fair point.

I know someone already posted...but honestly, anything investment grade or better with a short term focus would be a decent option imo. Gov't securities should be marginally safer / less volatile than Investment-grade...obviously with a slightly lower return.

Here's a listing of all the Vanguard Mutual funds...ETF is obviously totally fine. There's just more options to look at in the Mutual fund format. I'd probably go with an ETF personally...the major mutual funds are available in that format.

https://investor.vanguard.com/mutual...th-end-returns


My income is chunky throughout the year. I get paid a salary that we can live off and then I see business profits as income at other points during the year. So, while it wouldn't take me long to save another 3 months in the scheme of total income, the irregular income also makes me like to have a chunk of cash readily available. The points are valid...i could pretty much in every case wait the 5 days it would take to liquidate a bond fund if i needed to.


Chuckled at this. I'm definitely not in the doomsday prepper camp. I don't own any silver/gold at all, and wouldn't recommend that to anyone.

My ~3 months of expenses is clearly in a bank account, not physical cash, so in a 'society collapse' or 'disaster' scenario, I'm not getting immediate access to it. I probably do have a grand of cash at home at any time tho. Poker player habits die hard.

How is physical cash useful at all?

I've lived through what he describes during hurricane aftermath (multiple actually), and weirdly stores don't open without power which weirdly enables you to use your credit card. Also, in societal collapse, cash it probably the least useful thing ever. Along with gold. Ammo. Just stockpile ammo.

This has always baffled me too. Like if society is collapsing and money is worthless, there's NO ****ING WAY I'm giving up Food, Water, basic necessities for some shiny metal.

I guess its possible that in the medium term aftermath of societal collapse precious metals become a generally agreed upon currency, but planning for that, just seems pointless.

Totally makes sense.

I think when people talk about emergencies, they're mostly talking about situations where you no longer have that income stream to rely on.

I keep some cash on me when I travel out of habit, but realistically, these days there aren't a lot of emergency situations where you can use cash but not credit cards. All I can think of is if you lose your card or it becomes damaged and you absolutely need to get some groceries, it might be helpful to have a few hundo socked away until you can get a new card.

If people are really that concerned about juicing your EF for a bit extra, just put a good chunk of it in a CD ladder. I probably have about 5-6 months worth of living expenses as an EF and about half of that is in a CD ladder of 5 year CDs. I have one come due about every 6 months. You get pretty close to what you'd get with a midterm bond fund, no risk of price decline, and you can get the money in case of some horrible unforeseen emergency.

Yeah, and I think this can make sense too. The riskier/less reliable your income stream, the more reasonable an emergency fund can be.

I totally get there are a lot of factors in how much of an EF to have. But I often see people advocate for 3-6 months in cases where there are much better options.

Take OP for example:
* Double income in some-what diversified fields
* Still use to living on less than they make
* Multiple loans

I just can't imagine most couples in this situation should be saving much more than 1 months expenses (if that) in a separate emergency fund.



Me too. I try to hide a hundred dollars in each separate bag I have + in a discrete coat pocket or something. Mostly though its in the hope that if I'm robbed I'm left with at least $100. Almost never use it.

eh, in nazi germany many jews were able to bribe people to get out with gold/diamonds.

Its not for a mad max scenario, but for a war time type scenario.

for the record I own no physical gold but being jewish can understand it based on history

Also in regards to the OP:

Id put all my savings first towards maxing out that 7% IRA for the full match. The 3% is literally free money, nothing beats that. Then whatevers left over I would use to pay down the highest cost debt.

Beyond that there are some helpful links to the home buy vs rent decision, but something not mentioned is if you are inherently a shitty saver buying a house is nice forced discipline/savings. So may people nearing retirement would have been screwed had they not paid off their house in full. This is irrelevant for someone who is logical and has discipline but most people dont have those qualities.

If you really insist on investing your emergency fund in equities, then just invest 150-160% of your number into a diversified index. (Total world, or total US, or S&P 500)

My emergency fund is in a short term bond index in a Roth as I recover from long term unemployment. Once we're totally back on track, I'll shift most of this to a stock index fund pegged for retirement.

sort of grunching here.

i saw an investment risk scenario analyst who said you should know how your portfolio would perform if 80% of the world's population were wiped out in a nuclear holocaust.

also, know of another newsletter writer who specialized in 1000+ year cycles. he had many different subscription packages including a thrice daily service.

i think having all your $$$$ in equity mfunds is fine.. just make sure if you have $300K that you get the $50K you really need out long before the total value gets to $125k or something like that. sort of a form of portfolio insurance.

Just spit-balling here, but I would guess no matter what was in your portfolio it wouldn't do so good.

i think even a safe company like coke might see a fall-off in sales, depending on where the nuclear epicenters were located ... and yes, that's a joke at the end.

Your income stream is more risky than you think. A bad injury from an automobile accident tends to make it fairly difficult to show up to work, for instance.

Ruin sucks bad enough as an outcome to give up some upside to prevent it.

I'm covered by various work and personal insurance policies as well as Government programs. A bad accident would be very unlikely to impact my income to a point where I'd need an emergency fund to cover basic expenses.

But obviously there are always risks. I just suspect for many people the EV (both monetarily and overall utility) of having a super safe 3-6 months to cover those risks is negative.

It's not like I'm advocating not saving. But I think lots of people are still covered in cases like you mentioned above by one or more of things like: a partner with an income, insurance policies, government programs, access to retirement funds w/o penalty, relatively cheap credit, etc. etc. etc.

Pretty sure everyone knows how their portfolio would look in this scenario.

Your situation puts you into a very small minority. Are you Canadian? We don't have "government programs" in the US and most Americans have no insurance that would cover loss of income. Most also don't have 3-months expenses as an emergency fund.

Perhaps you mean "lots of people" to mean something other than "most people." I am quite sure that there are millions of people who are covered by your stipulations. There are many, many more who aren't.

The difference between having a constant 3-6 months of expenses in cash instead of risky assets barely moves the EV needle over a lifetime of working and investing, while greatly reducing the risk of ruin and variance of outcome.

I realized recently that long-term disability insurance is something overlooked by healthy young people, and it shouldn't be. My work gives it for free but I would have looked into buying it if not.

Many definitely means 'lots' and not 'most'.

Let's turn this around, why 3-6 and not 9-12? What makes 3-6 so obviously correct to you?

Also, people are being advised to forgo paying down debts or to save an emergency fund before other investing - so I don't agree that it barely moves the needle on EV.

Edit: And I disagree with the 'many many more' comment of Brian's.