6 ms·

> You're exactly the kind of person this article is pointing out, because your ability to be wiped away by the market is a precarious position to be in. Any sc

> You're exactly the kind of person this article is pointing out, because your ability to be wiped away by the market is a precarious position to be in. Any scenario where the stock market declines by 99% ($100k to $1k) would basically mean the collapse of the entire financial system. I doubt your bank savings account would be very useful in that scenario. Moreover, I don't think this article is actually talking about people who do save but just choose to save into high-return assets. I save 80-90% of my income, but it all goes into index funds. Does that mean I am not "a saver?"

toomuchtodo 11y ago
> Moreover, I don't think this article is actually talking about people who do save but just choose to save into high-return assets. I save 80-90% of my income, but it all goes into index funds. Does that mean I am not "a saver?" Not at all. This article is about people who aren't saving because they don't think its necessary or because they can't afford to. An emergency fund IS NOT an investment. It is insurance; treat it as such.
- morgante 11y ago
  > An emergency fund IS NOT an investment. Why should one have an "emergency fund?" I would genuinely love to hear a good argument for why keeping any cash assets when one has significant liquid investments, as I've never encountered one. Insurance companies invest their premiums. Why shouldn't I?
  - toomuchtodo 11y ago
    Insurance companies and banks are required to maintain a minimum amount of safe/liquid (read: cash) reserves. > I would genuinely love to hear a good argument for why keeping any cash assets when one has significant liquid investments, Can you describe an asset (besides US treasuries) that you can be assured of its value in a volatile market? Even money market funds have broken the buck before (~2008).
    - morgante 11y ago
      > Can you describe an asset (besides US treasuries) that you can be assured of its value in a volatile market? My point is emphatically not that your stocks will maintain their full value. But even at their lowest, their value will be more than enough to cover any emergency fund. A 50% drop on $100k will still leave you with $50k.
      - toomuchtodo 11y ago
        Which would ruin your investment outcome for years (if not decades, depending on the value of your portfolio at the event in question). If stocks take a loss that bad, you need the ability to not sell off to get liquid cash. That is what an emergency fund is for.
        morgante 11y ago
        Ah, but now that your argument is based on decreasing returns we can just do expected value analysis. Fortunately, many people have already done this, including Betterment: https://www.betterment.com/resources/personal-finance/safety-net-funds-why-traditional-advice-is-wrong/ https://www.betterment.com/resources/personal-finance/safety... Weighted by the probability of happening, you are better off investing all your money. Period.
kamaal 11y ago
>>Any scenario where the stock market declines by 99% ($100k to $1k) would basically mean the collapse of the entire financial system. Yet if you owned real estate[Land, Houses], they stand exactly as they are. While the numbers in the bank database turn to 0 after the collapse and companies go bankrupt and never recover. If you owned real estate, your money will recover in the very next turn.
- morgante 11y ago
  Agreed, but that's kind of off topic. Real estate is yet another asset class which should be included in a diversified investment strategy, but my point was that there's no evidence that money should be kept in a bank savings account.

toomuchtodo 11y ago

> Moreover, I don't think this article is actually talking about people who do save but just choose to save into high-return assets. I save 80-90% of my income, but it all goes into index funds. Does that mean I am not "a saver?" Not at all. This article is about people who aren't saving because they don't think its necessary or because they can't afford to. An emergency fund IS NOT an investment. It is insurance; treat it as such.

morgante 11y ago
> An emergency fund IS NOT an investment. Why should one have an "emergency fund?" I would genuinely love to hear a good argument for why keeping any cash assets when one has significant liquid investments, as I've never encountered one. Insurance companies invest their premiums. Why shouldn't I?
- toomuchtodo 11y ago
  Insurance companies and banks are required to maintain a minimum amount of safe/liquid (read: cash) reserves. > I would genuinely love to hear a good argument for why keeping any cash assets when one has significant liquid investments, Can you describe an asset (besides US treasuries) that you can be assured of its value in a volatile market? Even money market funds have broken the buck before (~2008).
  - morgante 11y ago
    > Can you describe an asset (besides US treasuries) that you can be assured of its value in a volatile market? My point is emphatically not that your stocks will maintain their full value. But even at their lowest, their value will be more than enough to cover any emergency fund. A 50% drop on $100k will still leave you with $50k.
    - toomuchtodo 11y ago
      Which would ruin your investment outcome for years (if not decades, depending on the value of your portfolio at the event in question). If stocks take a loss that bad, you need the ability to not sell off to get liquid cash. That is what an emergency fund is for.
      - morgante 11y ago
        Ah, but now that your argument is based on decreasing returns we can just do expected value analysis. Fortunately, many people have already done this, including Betterment: https://www.betterment.com/resources/personal-finance/safety-net-funds-why-traditional-advice-is-wrong/ https://www.betterment.com/resources/personal-finance/safety... Weighted by the probability of happening, you are better off investing all your money. Period.

kamaal 11y ago

>>Any scenario where the stock market declines by 99% ($100k to $1k) would basically mean the collapse of the entire financial system. Yet if you owned real estate[Land, Houses], they stand exactly as they are. While the numbers in the bank database turn to 0 after the collapse and companies go bankrupt and never recover. If you owned real estate, your money will recover in the very next turn.

morgante 11y ago
Agreed, but that's kind of off topic. Real estate is yet another asset class which should be included in a diversified investment strategy, but my point was that there's no evidence that money should be kept in a bank savings account.