3 ms·
Most of my savings is invested in index funds. Pretty much all of them allow you to withdraw the full amount in 3 days or so. Granted, do you have any idea wha
by zo1 11y ago
Most of my savings is invested in index funds. Pretty much all of them allow you to withdraw the full amount in 3 days or so.
Granted, do you have any idea what such a scenario might look like? Odds are, it can wait. Even large medical operations if you don't have medical insurance (where I live), simply require a modest deposit before they start the operation or expensive procedure. Though I do think they ask for some sort of proof that you have the money on hand.
But, again, most people here have enough money to pay for private healthcare insurance, or they rely on the free state hospitals.
Car, insured. Medical, insured. Bond payments, predictable.
So, I'm trying to figure out a valid plausible scenario where a large amount of "cash" is required in a very short amount of time. Any ideas?
- ryandrake 11y agoMostly medical costs or getting laid off are the scenarios I'd be worried about. Even if you're insured, medical bills add up and you tend to be billed very soon after care is provided.
- 6stringmerc 11y agoIn a scenario where you are found at fault in an accident (eventually / as the outcome), both legal fees and the judgment of having to pay out could put immense strain on your fiscal outlook in both the short and long term. Note I picked the word "accident" because it's something that is theoretically insured against but may not be sufficiently mitigated as a personal risk. E.g. umbrella is too small.
- stevewilhelm 11y agoThere is a difference between liquid and volatile. Index funds are definitely a liquid instrument, but they are very volatile. For funds that you know you will need in the next six months to three years, it is recommended to keep the funds in a liquid and very stable investment. Personally, I use a California (I live in CA) tax free short term bond fund. What type of expenses do I keep in this kind of fund? Tax payments I know I already owe (capital gains from an IPO for example), child's college tuition payments, planned major house repairs / remodels, pending car purchases, and as others have mentioned six months of living expenses in case of layoff or other emergencies.
- msallin 11y agoSure, you could liquidate your investments if need be, but you'll get hit with high short-term capital gains taxes if you sell equities you've held for a year or less. If held longer than a year, you'll pay long-term capital gains taxes, which are substantially lower.