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Emergency Fund
Posted on 3/18/14 at 10:37 pm
Posted on 3/18/14 at 10:37 pm
I have my emergency fund fully funded - but it is sitting in a savings account earning nothing.
I am tempted to pull it over to my fidelity account and try to do a little better than savings account return.
What do you MB experts do with your emergency funds for a better return than a savings account?
I am tempted to pull it over to my fidelity account and try to do a little better than savings account return.
What do you MB experts do with your emergency funds for a better return than a savings account?
Posted on 3/18/14 at 10:46 pm to nelatf
Peace of mind is worth more than cash value to me. I ensure I have 8k min in my checking by the time I'm paid.
10k is prob only 3 months expenses but I have a stable job and my wife could work asap if needed.
10k is prob only 3 months expenses but I have a stable job and my wife could work asap if needed.
Posted on 3/18/14 at 11:08 pm to nelatf
I put mine in a Roth IRA. The returns year over year aren't necessarily any better but the benefit comes about 15-20 years down the road because there is no tax at all.
Posted on 3/19/14 at 12:55 am to nelatf
I personally hate having money not working for me.
If you don't already have a Roth, use it for that.
After a few years, the accumulated gains will far offset losses you might incur if you happen to withdraw in the middle of a big downturn.
The key is to slowly phase it over. Don't dump all of your money in it at once, so part of it can build earnings without the full risk exposure.
Also, use a balanced fund, not all stock.
I use Vanguard's STAR fund.
If you don't already have a Roth, use it for that.
After a few years, the accumulated gains will far offset losses you might incur if you happen to withdraw in the middle of a big downturn.
The key is to slowly phase it over. Don't dump all of your money in it at once, so part of it can build earnings without the full risk exposure.
Also, use a balanced fund, not all stock.
I use Vanguard's STAR fund.
Posted on 3/19/14 at 6:04 am to nelatf
Set up a seperate brokerage acct and throw it in some kinda ultra stable bond fund.
Posted on 3/19/14 at 7:53 am to nelatf
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?
Posted on 3/19/14 at 8:16 am to reb13
quote:
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?
Never thought about it like that...
I def need to move some cash around...
I've got 8mo living in my savings, 8mo living in my checking, and about 5k in my frick You account.
My tax return along with a couple of nice paychecks have snuck up on me and I haven't had time to move it around.
Posted on 3/19/14 at 8:22 am to nelatf
If you are in br, I think pelican credit union is giving 4% on up to 10k and a little less than 1% on anything over.
Posted on 3/19/14 at 10:48 am to reb13
quote:
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?
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.
Posted on 3/19/14 at 12:32 pm to Ace Midnight
quote:
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
Correct me if I'm wrong, but Brokerage accounts are also insured up to a $$$ amount...
So I highly doubt those would be frozen and FDIC insured account wouldn't
Posted on 3/19/14 at 1:04 pm to reb13
quote:
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?
This is exactly what I do, and no I don't understand why anyone uses savings accounts these days either provided you can put it in a Roth, or in a brokerage account if you've run out of contribution limits everywhere else.
Posted on 3/19/14 at 1:12 pm to foshizzle
quote:
This is exactly what I do, and no I don't understand why anyone uses savings accounts these days either provided you can put it in a Roth, or in a brokerage account if you've run out of contribution limits everywhere else.
Here's a question, because it is currently bothering the shite out of me. (I already max my 401k match and ROTH for both the fiancee and myself). Right now I have 10k in a "high yield" online savings account.
Where would you put house down payment savings? Looking to buy before 2017, most likely late 2015 or in 2016.
This post was edited on 3/19/14 at 1:15 pm
Posted on 3/19/14 at 1:16 pm to Teddy Ruxpin
I convinced my wife to put into a brokerage account. You really only need MAYBE a month in cash, everything else can be easily reached in that amount of time.
Posted on 3/19/14 at 1:17 pm to barry
quote:
I convinced my wife to put into a brokerage account. You really only need MAYBE a month in cash, everything else can be easily reached in that amount of time.
So go into a taxable investment account? Seems like the only option left besides where I'm currently located. Obviously, the risk is loss of principal, etc. etc. etc.
ETA: If I do this, I might have to move some stuff around for tax efficiency. Doesn't look like the popular options of STAR, Wellesley or Wellington look particularly efficient, but maybe I'm a dumby.
This post was edited on 3/19/14 at 1:46 pm
Posted on 3/19/14 at 1:24 pm to nelatf
I have my emergency fund in an Individual investment account, which can be fully liquid within 5 days if need be. Obviously there is some risk involved, but I monitor it constantly.
Posted on 3/19/14 at 2:32 pm to Lsut81
quote:
Correct me if I'm wrong, but Brokerage accounts are also insured up to a $$$ amount...
I don't think stocks, bonds and mutual funds are insured - maybe if your brokerage buys your CDs - those might qualify.
quote:
So I highly doubt those would be frozen and FDIC insured account wouldn't
You can't envision a situation where the trading floor and brokerage accounts are frozen, but ordinary deposit accounts remain active (for a while - no question a run will shut them down, too)? I agree that it appears unlikely, but certainly not unimaginable.
Posted on 3/19/14 at 2:34 pm to Ace Midnight
quote:
The Securities Investors Protection Corporation (SIPC), a non government entity, replaces missing stocks and other securities in customer accounts held by its members up to $500,000, including up to $250,000 in cash, if a member brokerage or bank brokerage subsidiary fails.
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