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Old 03-09-2017, 07:17 PM   #26
Didace
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Re: Retirement

I think we're anticipating different levels of "emergency". Maybe, I might be wrong.
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Old 03-09-2017, 07:58 PM   #27
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Re: Retirement

Yeah...
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Old 03-09-2017, 10:19 PM   #28
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Re: Retirement

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Originally Posted by DTEJD1997 View Post

To be extra safe, I would also keep an amount of physical silver/gold and a stash of food/water.
lol
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Old 03-09-2017, 10:45 PM   #29
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Re: Retirement

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.
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Old 03-09-2017, 11:20 PM   #30
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Re: Retirement

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Originally Posted by Cranberry Tea View Post
Any good bond funds that can be easily cashed out in an emergency that you'd recommend for this purpose?

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...
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Old 03-10-2017, 08:40 AM   #31
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Re: Retirement

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Originally Posted by jalexand42 View Post
You're underestimating how lazy I am.

And in seriousness...it provides ALOT of comfort to my wife too.
A fair point.
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Old 03-10-2017, 09:30 AM   #32
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Re: Retirement

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Originally Posted by Cranberry Tea View Post
Any good bond funds that can be easily cashed out in an emergency that you'd recommend for this purpose? I feel like I'll go on tilt if I just have big piles of cash sitting in a savings account not being productive.
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


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Originally Posted by jjshabado View Post
So in your case, I'm curious how long it would take you to save ~3 months of living expenses? If your fixed expenses eat up something like 90% of your income, it may make sense to have an emergency fund. But if your fixed expenses eat up something like 50% of your income or less, it just doesn't seem like its necessary.

That being said, I get the "peace of mind" argument.
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.


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Hey all:

Relying on credit as your "emergency fund" is an extremely foolish thing to do in my opinion...

If the power is out, what do you do? You NEED CASH. I've been through hurricanes, tornadoes, power outages, etc, and when the power is out, YOU NEED CASH.

Another potential problem is what happens if the magnetic strip on your credit card gets damaged? Then the machine can't read it and your are out of luck.

What happens if there is a hold on your account? Identity theft? Server SNAFU?

With cash, you simply don't have any of these problems. There is no counter party risk. You've got cash, you are good to go.

Credit/debit cards work fine the vast majority of time, but I've had numerous times when they didn't. Heck, just yesterday was one of those times. High winds in my area cut power to a lot homes/businesses. I needed to make a purchase and the merchant was taking cash only.

Always keep a couple of hundred in your wallet, have a couple thousand hidden at home and you are likely set.

To be extra safe, I would also keep an amount of physical silver/gold and a stash of food/water.
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.
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Old 03-10-2017, 10:24 AM   #33
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Re: Retirement

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.
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Old 03-10-2017, 11:04 AM   #34
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Re: Retirement

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Originally Posted by Mihkel05 View Post
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.
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Old 03-10-2017, 11:05 AM   #35
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Re: Retirement

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Originally Posted by jalexand42 View Post
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.
Totally makes sense.
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Old 03-10-2017, 11:28 AM   #36
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Re: Retirement

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Originally Posted by jjshabado View Post
If you're regularly saving money and earn a decent income (aka your fixed expenses aren't a large percentage of your income) than you should be able to pay off a lot of emergencies using credit
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.
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Old 03-10-2017, 11:34 AM   #37
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Re: Retirement

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.
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Old 03-10-2017, 12:47 PM   #38
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Re: Retirement

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Originally Posted by Cranberry Tea View Post
I think when people talk about emergencies, they're mostly talking about situations where you no longer have that income stream to rely on.
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.



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Originally Posted by Cranberry Tea View Post
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.
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.
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Old 03-11-2017, 07:54 AM   #39
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Re: Retirement

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Originally Posted by jjshabado View Post
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.
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
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Old 03-11-2017, 08:00 AM   #40
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Re: Retirement

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 ****ty 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.
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Old 03-11-2017, 10:26 AM   #41
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Re: Retirement

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.
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Old 03-11-2017, 06:12 PM   #42
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Re: 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.
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Old 03-11-2017, 08:22 PM   #43
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Re: Retirement

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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.
Just spit-balling here, but I would guess no matter what was in your portfolio it wouldn't do so good.
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Old 03-11-2017, 08:25 PM   #44
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Re: Retirement

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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.
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Old 03-11-2017, 10:29 PM   #45
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Re: Retirement

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Originally Posted by jjshabado View Post
Yeah, and I think this can make sense too. The riskier/less reliable your income stream, the more reasonable an emergency fund can be.
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.
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Old 03-12-2017, 09:26 AM   #46
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Re: Retirement

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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.
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Old 03-12-2017, 01:31 PM   #47
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Re: Retirement

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Originally Posted by rivercitybirdie View Post
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.
Pretty sure everyone knows how their portfolio would look in this scenario.
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Old 03-13-2017, 01:30 AM   #48
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Re: Retirement

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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.
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.
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Old 03-13-2017, 01:56 AM   #49
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Re: Retirement

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.
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Old 03-13-2017, 06:39 AM   #50
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Retirement

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.
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