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Old 09-17-2019, 08:29 AM
 
Location: Colorado
160 posts, read 35,880 times
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One of the reasons to have a large emergency fund is if you lose your income during employment. If you are receiving Social Security, a pension, and taking 3 to 4% of your savings to live in retirement then the odds of losing some or all of that income is very small.

Say that Social Security and a pension covers 90% of your retirement income. So have an emergency fund that only covers that 10% of income that you will be getting from your retirement funds. Not lucky enough to have a pension, then increase that 10% to whatever percent that you may need.

The way we are planning is for our emergency fund to cover only for the non-guaranteed portion of our retirement income plus a little extra for that new roof or car. Your mileage may vary.
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Old 09-19-2019, 05:39 AM
 
Location: Guadalajara, MX
6,246 posts, read 3,052,010 times
Reputation: 12004
Quote:
Originally Posted by Mr5150 View Post
Dave Ramsey has Some good advice if you want to be a successful miser. He says donít buy a car unless you can pay cash.
I don't agree with this advice. A car is just a tool, and leveraging the investment for greater potential returns can be an example of good use of credit. If having a car enables one to work in manner that earns more than the car costs, it's a good investment. I'd also argue there are indeed successful misers who have bought cars using auto loans.

Obviously, like credit cards, this is often abused where folks buy cars they don't need or can't afford but that doesn't validate the blanket rule that nobody should buy a car unless they can pay cash.
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Old 09-19-2019, 08:45 AM
 
14,566 posts, read 7,834,641 times
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Quote:
Originally Posted by Deoge View Post
One of the reasons to have a large emergency fund is if you lose your income during employment. If you are receiving Social Security, a pension, and taking 3 to 4% of your savings to live in retirement then the odds of losing some or all of that income is very small.

Yep. In my 50s, my tech career started being unstable. I kept my emergency fund at 3 years expenses.


Now, I can start tapping my tax deferred portfolio in a tax-efficient way. That covers my cash flow and the emergency fund is for extraordinary expenses.
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Old 09-19-2019, 09:39 AM
 
11,472 posts, read 11,469,774 times
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The CD rates just fell another quarter-point since the Fed's interest rate cut yesterday. The riskiest banks ( read:teeny-tiny banks that the FDIC would never cover in a another big meltdown like2008 despite their claims to the contrary) are offering 2.2% and thereabouts, which means the larger safer ones will be at 0.05% which is getting near the bottoms we saw in 2009. Keep that in mind.
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Old 09-19-2019, 10:22 AM
 
73,520 posts, read 73,313,926 times
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i use treasury money markets
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Old 09-19-2019, 02:14 PM
 
494 posts, read 995,797 times
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Quote:
Originally Posted by mathjak107 View Post
i use treasury money markets
I do as well - Checked yesterday, and Vanguard Treasury Money Market Fund (VUSXX) is right at 1.95%. My Goldman Sachs Marcus account is paying 2.00%.
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Old 09-19-2019, 03:03 PM
 
Location: Texas
2,020 posts, read 1,417,704 times
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Much is dependent on your age, at age 78 much of my income is from dividends on my investments. RMD withdrawals into my checking account cover that, thus no need to sell any investments. I will not reinvest the cash that accumulates in my savings, MM, or checking accounts so I carry a very high balance of cash, much drawing 2% interest.

Afterthought, I did take some money from checking and bought 500 of VTI and 100 AAPL at a downturn that has worked out well.
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Old 09-19-2019, 05:03 PM
 
Location: Guadalajara, MX
6,246 posts, read 3,052,010 times
Reputation: 12004
Quote:
Originally Posted by mathjak107 View Post
i use treasury money markets
We use the Stable Value Fund in the wife's 457.

Quote:
Originally Posted by thrillobyte View Post
read:teeny-tiny banks that the FDIC would never cover in a another big meltdown like2008 despite their claims to the contrary)
Has there been an actual case of FDIC not covering a failed bank because it was teeny-tiny or are you just framing an opinion as fact? Genuinely curious, I'd love to read about the legal process that happened.
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Old 09-19-2019, 06:40 PM
 
30,040 posts, read 35,244,965 times
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Our after tax savings and investment accounts are continuing to grow and provide a comfortable after tax cushion
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Old 09-19-2019, 08:15 PM
 
7,238 posts, read 3,986,498 times
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There are reasonably safe investments for the 3-5 year time frame.

I would keep cash/money market for two years emergency fund, or something like that. The 3-5 years should be accessible, but can be invested in a conservative allocation fund (30% stocks, 70% bonds) which would also give you a dividend (not much, but income).

I have built a basket of stocks and REITs and funds that pay dividends. Those dividends, coupled with my Social Security, can cover all my basic needs. So my emergency fund is for an unexpected expense that is not part of my normal living expenses (a new a/c system, big car repair).

But that's me, and it required me doing a LOT of research and spending more hours than I can count, to do this. It also requires ongoing work. Most people can't or wouldn't want to do that. But there are some reasonably safe funds that pay dividends (not as much as I get with individual holdings, but it's income). Dividends/distributions will pay even when the stock market is down.

The reason I did that is that I don't want to have to sell anything when the market is way down. Plus I'm just comfortable with a reasonably steady income, above my SS. There's a trade-off, though. The growth funds, the ones with the biggest returns over time, won't pay dividends. (I have a few of those, too.)
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