ER_Hopeful
Recycles dryer sheets
Looking for suggestions on where to put my emergency $ (about $20k.) It used to be in an Etrade CD until last year, now it's in Vanguard MM earning close to nothing.
Capital One is a good spot that earns 1.4% if you set up a Costco account you can even get a 50 buck bonusI like CD ladders, but have been parking mine in ING plain old savings for 1.1%, No minimums, so I will move it when rates start to climb. Still next to nothing, but better than some other places for now...
Emergency money just needs to be liquid - easily available. Maybe I want to be able to write a check against it - most mutual funds allow that. For some reason, people also seem to think it must be 'dollar certain' - why?
The "problem" with the CDs & I bonds is the fine print on their minimum holding periods and interest penalties.If you don't need it. or at least part of it, for one year you could put some into ibonds. Low risk and one of the few places to put money into fixed assets with inflation protection.
Then again, if you are retired and rely on interest income to a significant degree, you have also had a significant "loss of income" along with folks who were laid off.I use the generic term "emergency fund," but loss-of-income is the primary "emergency" for which this fund is earmarked. For most of us who are not yet FIREd, an emergency fund is probably best viewed as a "layoff fund."
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If you're retired already, then yes, it's unlikely that you have a need for a large "emergency fund," but I suppose there are some emotional benefits to having one nonetheless.
I use the generic term "emergency fund," but loss-of-income is the primary "emergency" for which this fund is earmarked. For most of us who are not yet FIREd, an emergency fund is probably best viewed as a "layoff fund."
Lots of folks lost their jobs in or around the fall of 2008, just as the market tanked. Not a good thing if your 50K layoff fund is chopped down to 25K at the same time you need to start dipping into it! In my case, the "dollar certain" requirement is important, because it's linked to X number of months of living expenses, the plan being that within that time I will be able to find another job.
If you're retired already, then yes, it's unlikely that you have a need for a large "emergency fund," but I suppose there are some emotional benefits to having one nonetheless.
I use the generic term "emergency fund," but loss-of-income is the primary "emergency" for which this fund is earmarked. For most of us who are not yet FIREd, an emergency fund is probably best viewed as a "layoff fund."
Then again, if you are retired and rely on interest income to a significant degree, you have also had a significant "loss of income" along with folks who were laid off.
Looking for suggestions on where to put my emergency $ (about $20k.) It used to be in an Etrade CD until last year, now it's in Vanguard MM earning close to nothing.
I keep $5-10K in a personal "high interest" savings account, and $20-30K in a corporate "high interest" savings account. For a significant emergency, I could use that to pay myself a dividend (which would have tax consequences). I also have a HELOC on an investment property and if necessary could raise another $20K there.
Does anyone have an opinion on whether an emergency fund may need to be differently structured in the accumulation and decumulation phases?
So, for example, I am w*rking. Twice a month my pay is deposited in my account. I know what I am earning and I know that the end of year reconciliation will be in my favour. Having the expectation of future cash flows means that sometimes skate "close to the wire" in my personal account, so I check it several times a week and top up from the savings account if needed. But if I were RE, I would want a larger cash buffer.
We keep two years' expenses in cash in a money market account, so we may not really need an "emergency fund"-- it is the emergency fund.Does anyone have an opinion on whether an emergency fund may need to be differently structured in the accumulation and decumulation phases?
I think cash management is significantly different after retirement. First of all, there is the psychological effect -- knowing there is no further salary income to count on. Secondly, managing money becomes a broader concern: there is no deposit to savings each month, and, going over budget could be a problem downstream.Does anyone have an opinion on whether an emergency fund may need to be differently structured in the accumulation and decumulation phases?