re: Emergency Fund

Day Trade

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I do not understand the need for a savings account, what expense cannot be put on a credit card while you unwind your brokerage account? It takes what, 5 days max to get the money?

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It's a good point - the only thing that leans against that is some crippling financial crisis that affects the brokerage accounts (or freezes them) but doesn't affect FDIC accounts - at least not immediately.

Crazier things have happened. I'm only about $12k in savings - the balance of my "emergency" fund is in stocks. I'm going to move more of my actual "emergency fund" savings into a Vanguard vehicle - then just roll that into excess investment.

quote:

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I do not understand the need for a savings account, what expense cannot be put on a credit card while you unwind your brokerage account? It takes what, 5 days max to get the money?

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This was my strategy for a long time, I kept all cash "working" for me and had a 20k personal line of credit I could tap at any time. Then 2008 came along and the bank cancelled my LOC, a week before I received notice that I was being laid off. It was amazing how fast I went from what I thought was being perfectly set up to the brink of having to liquidate holdings right at the bottom. I got through it, barely, without having to take any big losses. But there were a couple months there where I did any and all odd jobs I could scratch together to cover the bills. Then I found an even better job and have lived happily ever after, but since that experience I keep a fully funded emergency fund in a savings account that only a complete and systemic collapse would destroy. Likely over-kill, but I promised myself I'd never again be at the mercy of someone/something else in an emergency.