T
Tiger
Guest
I am considering not counting my emergency funds as part of my asset allocation and I was wondering how others handle it.
Alan said:I can still rmember when the days when my emergency cash reserves was all the savings I had. I count it in with my whole portfolio which is 5% cash these days instead of 100%
sgeeeee said:I only have one portfolio. I know some people like to think about separate buckets or about their real investments vs their gambling money, etc.
I try to think about everything as one portfolio comprised of many investments with various risk-reward profiles. So the risks of one investment can be balanced with other investments that have different risks.
chinaco said:Yup. Because I know for a certainty that I will not need to spend it.
I am 99.9% positive that I will retire at my company in 4.x years.
I am 99.9% positive that DW will retire at her company in 4.x years
Both companies have survived over 100 years independently. DW company is #1 Mega corp in its primary market. My company is a bit smaller (mutli-billion $ organization) but in the top 10 in its industry... very strong! Plus, both companies are in completely different industries.
Even if one of use got fired (downsized, whatever), the other job is a backup with full retirement health benes. We could easily live on the lowest salary and still save money... we have a very low probability of needing to actually use the money.
Right now, it is the basis for accumulating 3 years of cash for the cash bucket of our retirement income stream. We are putting most savings into cash (and short-term bond) right now in prep for retirement.
SteveR said:The danger with this logic is emergencies outside of the work place. Health issues (cancer, heart attack, stroke) or accidents can upset even the best laid plans. If one of you were to become disabled would you still be OK without touching your emergency funds for the next 4.X years? What if one of you were killed by a health issue or accident? How would that affect your finances? I see no reason to necessarily have these funds in an isolated account as long as you consider the money there as an emergency reserve that is only to be used in a true emergency. How you have it invested is not as important as having it.