What is a good amount to have? I have roughly 25 k, or 6 months of savings that will cover all bills (mortgage, taxes, food, etc.) on hand and feel that's adequate, but I also feel like I'm getting the short end of the stick b/c I'm not investing it and gaining interest on my investments. What do you think ?
Emergency Cash
- Thread starter JayDogSmooth
- Start date
So, is this the money that you keep in your ceiling panels next to the lockbox with gun and fake passports?
That should be the right amount. Better to have $25k when you need it than to take some stupid risk with it and have $20k when you need it. The incremental money you would get taking any kind of conservative, sensible risk is so minimal that it really isn't worth it. Put it in a checking or savings account, earn next to nothing on it, and be glad it is there.
Considering many people in this country can't scrap together two nickels, keep that money safe and with future savings, you can invest that money.
Considering many people in this country can't scrap together two nickels, keep that money safe and with future savings, you can invest that money.
Good thought. A lot of space between the interior paneling and exterior body. And if any of that hard cash accidentally gets sucked into the powertrain or running gear, repairs will be quite affordable.
Of course, since this thread seems to be just mindless money flaunting, something like a Mercedes-Maybach Pullman might prove more in line with your greater goals. That added wheelbase will come in handy for stashing small bills, too.
I know this probably goes without saying, but don't keep that money in a shoebox under your bed, or anything. If the emergency fund is for, say, getting back on your feet after an apartment/home fire (or a break in/robbery), it may not be much use.
Hell keep it in cash at home. If you end up needing it in a public emergency the ATMs won't be giving it to you. And as said before you are foregoing what .06% interest on savings?
That's tough to answer without context, as others have said. A fairly common rule of thumb is having 6 months expenses in cash or CAS equivalents. Having said that it depends on your situation and funds available. A cash or fixed income portion of an asset allocation is dependent upon goals, current and expected future scenarios, and other contextual matters. For example, would you want to be all-in on equities when the tech bubble crashed or in 2008? Probably not. Me personally I am more weighted to equities than most "rules of thumb" would place me For my age but I also have several years expenses covered so I don't have to sell in a bear market. There are trade offs and peace of mind issues related to your context. There is no real "right" or correct answer for everyone, in my view.
Once you have an emergency fund that you are comfortable covers you...and that is a very personal risk based decision, then you can take the extra you have from your paycheck and get as aggressive with it as you want knowing you have a safety net even if you lost your job/health/investments... Most important advantage to the emergency fund is financial security and soon as you build additional funds...financial independence which to me is when you get to make choices based on wants not on needs! You can choose what is right for your life not what you need to do to make ends meet. Good luck to you. You are already well on your way.
6 months of cash is more than adequate. Only thing I would suggest is keeping some cash, maybe $5k in bills in a fireproof safe in the event of another Sandy or terrorist event the shut the banks for a few days or weeks. Some financial planners say 3 month of expenses, as they can generally liquidate other assets in a real pinch.
If you live close to Bridgewater, you can put it into Synchrony Bank to get 1.05 interest with their HYS account. Would only be about $260 a year earnings but you could buy a couple of Rutgers jackets or something with $260.
https://www.synchronybank.com/banking/products/high-yield-saving/index.htm?UISCode=0000000
https://www.synchronybank.com/banking/products/high-yield-saving/index.htm?UISCode=0000000
Emergency funds are for emergencies. You should keep it in a checking account or savings account. A lot of folks (especially younger folks like myself), think the stock market is a great place to invest and money will only ever go up. Just remember that, over a 30 year span, yes, you can kind of guarantee you will get some returns. However, if a year like 2008 hits again and you lose your job, you will be happy that you have some money backed up that gives you some peace of mind.
I have it on good authority, namely @RutgersRaRa, that Au Bon Pain is the new Subway. Since RaRa is known to have his ear to the ground (especially after drinking a lot), and is therefore always hearing things (especially after dropping acid), I think it would be wise to heed his words on the subject.
tl;dr - buy an Au Bon Pain franchise (or a Honda Accord)
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