Why bother having an emergency fund at all?

[Oldschooler]

OP didn't call anything. it's his opinion and the way he manages him money, he is more risky than me.
I am good financially, and I still have my 10k emergency fund, and I'll never touch it. Yes, I could invest it but I'm not going to.
There are some things you can't pay with a credit card, like rents or mortgage, but if you want to do a cash advance and risk 20% interest on that with no clear future that you'll be rebounding your source of income, go ahead and do that.

Again just my opinion, just b/c the stock market hasn't crashed doesn't mean it won't, just because things have happened before doesn't mean they won't, there's infinite possibilities for the future. Just have something in case shyt hits the fan.

Facts, the stock market ballooning like this isn't a good sign. To the dude that said as long as he has his job he's good...what happens during a recession when stocks tank is that people lose their jobs! It's very important to have an emergency fund in my opinion. It should cover expenses at least 6 months.

 

[winb83]

Facts, the stock market ballooning like this isn't a good sign. To the dude that said as long as he has his job he's good...what happens during a recession when stocks tank is that people lose their jobs! It's very important to have an emergency fund in my opinion. It should cover expenses at least 6 months.

Let's say you have about a $80K-$100K stock portfolio. Your 6 months of expenses are roughly $10K. You also keep roughly 1-2 pay checks in your checking account as a buffer to prevent overdrafting.

Are you really not gonna be able to pull out that $10K? If you don't lose your job for 10 years and add 0 dollars to it that $10K grows to $21K on it's own. If you add $100 a month to it it grows to almost $40K. If that money doubled or more even if you had to pull it in an economic downturn you have 50% of wiggle room to lose before you actually lose what that fund would have been if it was just sitting cash. You'll also be collecting unemployment.

It's important to have access to funds yes but a traditional emergency fund sitting in a bank now growing really. I'm not really for that.

 

[winb83]

My thinking on this has evolved. I don't really care about the emergency fund aspect of it but I need to keep an acceptable amount of cash on-hand to invest when the markets hit a rough patch. When you're constantly all in on the market when there's a huge decline your hands are kinda tied.

 

[winb83]

Not gonna lie this thread aged poorly. I still have about now $100K in taxable investments that aren't in retirement accounts I have access to if needed but I do keep about $10K in liquid cash especially in this high interest rate environment that gets me 4.6% APY back on it.

 

[Mike Nasty]

Not gonna lie this thread aged poorly

Indeed, I would have been hammered if I didn't have money to cover mishaps. Putting repairs on credit would be taking two steps back.

 

[winb83]

Indeed, I would have been hammered if I didn't have money to cover mishaps. Putting repairs on credit would be taking two steps back.

The point wasn't to not have funds to cover stuff the point was to not have it in liquid cash. I still have a taxable investment account with a fair amount of money in it that is push came to shove I could draw from strategically if needed. It's just that now I keep what I would consider bare minimum in cash on hand to draw from first because Id rather not sell investments. I don't like doing that but to those limits I will.

I'd still put repairs on my credit card. That way I could get 2%-5% cash back depending on the card I use. I buy almost nothing with cash anymore.

 

[thaKEAF]

Not gonna lie this thread aged poorly. I still have about now $100K in taxable investments that aren't in retirement accounts I have access to if needed but I do keep about $10K in liquid cash especially in this high interest rate environment that gets me 4.6% APY back on it.

Impressive. If you don’t mind me asking..Do you rent or own?

 

[winb83]

Impressive. If you don’t mind me asking..Do you rent or own?

Rent

 

[Rev Leon Lonnie Love]

Not having one showed me flames back in 2021 where I was damn near homeless borrowing money left and right. Never again

 

[winb83]

Not having one showed me flames back in 2021 where I was damn near homeless borrowing money left and right. Never again

To be honest I still don't have much of one. Maybe about $10K or so squirreled away between a few different accounts. I take most of my free money and put it into investing or my house down payment fund.

I did end up needing to use $1260 on my car to repair it from a hit and run but I put that on a credit card that I'll pay before it's due.

 

[Secure Da Bag]

My car broke down. I charged it to my newest credit card and got 1% cash back. I have no interest on it till July 2020 so that $1300 will be paid off long before then and I won't touch my emergency fund at all.

It's not even a legitimate debt because I have enough money in savings to wipe it out. I'll pay that off my next 2-3 pay checks instead.

2019 was rougher than I remembered.

 

[DrunkerThanAMotherfucker]

Emergency savings should be cash. Either HYSA or money market fund. FDIC insured. Highest interest rate you can find at an online bank or brokerage with good mobile support. The money can only go up (real, you’ll always lose some purchasing power to inflation).

Having market exposure on emergency savings is a very risky game. If you need to withdraw on a market downturn the immediate losses and future compound losses can be significant. And drops in index funds are correlated with the types of life events that would require someone dipping into emergency savings, such as loss of job.

I don’t think of my emergency fund as profit generating. It’s insurance against the market/economy.