Do any of you ever attempt to complete a stress test on what you save and invest? If so, what have you learned about yourself doing this?

Two examples:
1: Simulating a crash in the stock market?

2: Simulate being fired and learning how long you manage living strictly off of your emergency fund.

I am interested in learning more about myself financially. I want to complete a stress test, probably more based on the second example rather the first. I would continue to allocate my income regularly, except all expenses would come directly out of the test emergency account that I set up. These expenses to the account will occur until it is either depleted, or I have "survived" the amount of time that my test will run for. Not sure if this is extreme or not, more so an idea

This post was edited on 11/5/12 at 3:14 pm

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Posted by LSUcam

Destin FL

Member since Dec 2011

381 posts

Posted on 11/5/12 at 4:32 pm to RickAstley

Just take your monthly expenses, and ensure you have adequate cash savings (on top of investment savings) to meet around 6 months of expenses. I don't care who you are or where you live in America but if you can't find ANY job in 6 months, thats pathetic.

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Posted by foshizzle

Washington DC metro

Member since Mar 2008

40599 posts

Posted on 11/5/12 at 8:33 pm to RickAstley

I don't worry about #1 too much, as I am in the "invest and forget" camp. No, I didn't do very much at all during our big crash and came out just dandy.

For #2 I think it's important to have access to credit (at a low rate of course) if you need it and just not use it. That's in addition to savings, not in place of it. The thing is that it builds you extra cushion should you be out of work for an extended period.

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