3 ms·

Sure, but the old "you can't time the market" maxim goes both ways. How would I have known to get my emergency fund out at exactly the right time? Remember, thi

Sure, but the old "you can't time the market" maxim goes both ways. How would I have known to get my emergency fund out at exactly the right time? Remember, this is my emergency fund. I've got other investment money earmarked for investing. But for emergencies it's cash in the bank. That way I'm not having to pull money out of the market when the market is down. And it's when the market is down that you're more likely to lose your job, for example.

gowld 7y ago
The point is that even pulling out at the worst possible time is still better than having never been in it.
- UncleOxidant 7y ago
  Again: This is my emergency fund. This is my "the shit has hit the fan and it's all gone to hell" (like with a global pandemic, for example) fund. I'm not gonna gamble with the emergency fund. You may. I do not. We have no idea how bad this could get. As I mentioned above, I have other money that I do invest in the market, but I keep a year's worth of expenses in cash (edit: and some in iBonds, but most of that was put in years ago when the yields were higher.)
- p1esk 7y ago
  That point is absurd. You can easily lose everything you invested.
twblalock 7y ago
> That way I'm not having to pull money out of the market when the market is down. If your money had been in the market, it would have gone up and then down. You might end up with more money in the end than if you had never invested.
- Jtsummers 7y ago
  They didn't say they never invested. They said they don't invest their e-fund. That's a very different thing and it's dishonest to try and conflate the two ideas.
  - twblalock 7y ago
    > They didn't say they never invested. They said they don't invest their e-fund. That's a very different thing and it's dishonest to try and conflate the two ideas. I never said otherwise and you should retract your accusation of dishonesty.
    - Jtsummers 7y ago
      Quoting you: > You might end up with more money in the end than if you had never invested. My reading of your comment was perhaps too harsh, but your statement implied to my initial reading as if the parent said they never invested. Which is not at all what they said, but rather that they kept cash in the bank and a separate amount invested. The cash is to avoid the risks of market timing (you can't do it, basically). People are getting lucky that right now they're still ahead on their investments. But there's no guarantee that will remain true over the next month or two when the money is actually needed. And if you look at the S&P and Dow, the past 2 years are basically all lost if you had to sell right now. There was a dip in early 2019, but most of the past two years were above today's prices for both indexes. So you can plan on being lucky, or you can set aside a relatively small amount and actually plan.
      - twblalock 7y ago
        You replied to my comment with the least charitable interpretation of what I wrote, which is against the guidelines. You also accused me of dishonesty.
ping_pong 7y ago
People who say your emergency fund should be in the markets don't have any realistic life experiences. You're doing the right thing by leaving it in cash.
- UncleOxidant 7y ago
  I'm guessing most people who say the emergency fund should be in the market are under 40. I say this because it's been over 10 years now since the last recession and a lot of folks under 30 haven't experienced one since they've been out on their own. They haven't experienced a prolonged bear market. Folks over 40 can remember the tech wreck (2001-2003ish) the housing bubble implosion (2008-2012ish). Folks over about 55 can recall how bad the late 70s, early 80s were. And then there's just stuff that's not related to the economy. Life happens. Emergency appendectomies. A family member gets diagnosed with cancer. You burn out on your profession. The longer you live the more of this kind of stuff you've experienced.
  - craftyguy 7y ago
    I'm guessing you have no basis for this comment, and are just trolling age discrimination.
  - basch 7y ago
    My understanding of investing savings is that it is still diversified, not all in on the S&P500. Something like the golden butterfly with a cash component, would allow you to spend the cash first. Then you could choose if you want to deplete an asset that hasn't plummeted, or withdraw from each category equally. https://portfoliocharts.com/portfolio/golden-butterfly/ https://portfoliocharts.com/portfolio/golden-butterfly/ You could also use something like a Line of Credit against your stock. Both Schwab and M1 offer it. That way you can spend in an emergency, and hopefully your growth rate offsets the interest rate. https://www.schwab.com/public/schwab/banking_lending/pledged_asset_line https://www.schwab.com/public/schwab/banking_lending/pledged... https://www.m1finance.com/articles-1/portfolio-line-of-credit-guide/ https://www.m1finance.com/articles-1/portfolio-line-of-credi... "With M1 Borrow, you can borrow up to 35% of your invested portfolio at a 3.50% interest rate instantly (2.75% if you are using M1 Plus). There's never been such a low cost, convenient, and flexible way to borrow money."

gowld 7y ago

The point is that even pulling out at the worst possible time is still better than having never been in it.

UncleOxidant 7y ago
Again: This is my emergency fund. This is my "the shit has hit the fan and it's all gone to hell" (like with a global pandemic, for example) fund. I'm not gonna gamble with the emergency fund. You may. I do not. We have no idea how bad this could get. As I mentioned above, I have other money that I do invest in the market, but I keep a year's worth of expenses in cash (edit: and some in iBonds, but most of that was put in years ago when the yields were higher.)
p1esk 7y ago
That point is absurd. You can easily lose everything you invested.

twblalock 7y ago

> That way I'm not having to pull money out of the market when the market is down. If your money had been in the market, it would have gone up and then down. You might end up with more money in the end than if you had never invested.

Jtsummers 7y ago
They didn't say they never invested. They said they don't invest their e-fund. That's a very different thing and it's dishonest to try and conflate the two ideas.
- twblalock 7y ago
  > They didn't say they never invested. They said they don't invest their e-fund. That's a very different thing and it's dishonest to try and conflate the two ideas. I never said otherwise and you should retract your accusation of dishonesty.
  - Jtsummers 7y ago
    Quoting you: > You might end up with more money in the end than if you had never invested. My reading of your comment was perhaps too harsh, but your statement implied to my initial reading as if the parent said they never invested. Which is not at all what they said, but rather that they kept cash in the bank and a separate amount invested. The cash is to avoid the risks of market timing (you can't do it, basically). People are getting lucky that right now they're still ahead on their investments. But there's no guarantee that will remain true over the next month or two when the money is actually needed. And if you look at the S&P and Dow, the past 2 years are basically all lost if you had to sell right now. There was a dip in early 2019, but most of the past two years were above today's prices for both indexes. So you can plan on being lucky, or you can set aside a relatively small amount and actually plan.
    - twblalock 7y ago
      You replied to my comment with the least charitable interpretation of what I wrote, which is against the guidelines. You also accused me of dishonesty.

ping_pong 7y ago

People who say your emergency fund should be in the markets don't have any realistic life experiences. You're doing the right thing by leaving it in cash.

UncleOxidant 7y ago
I'm guessing most people who say the emergency fund should be in the market are under 40. I say this because it's been over 10 years now since the last recession and a lot of folks under 30 haven't experienced one since they've been out on their own. They haven't experienced a prolonged bear market. Folks over 40 can remember the tech wreck (2001-2003ish) the housing bubble implosion (2008-2012ish). Folks over about 55 can recall how bad the late 70s, early 80s were. And then there's just stuff that's not related to the economy. Life happens. Emergency appendectomies. A family member gets diagnosed with cancer. You burn out on your profession. The longer you live the more of this kind of stuff you've experienced.
- craftyguy 7y ago
  I'm guessing you have no basis for this comment, and are just trolling age discrimination.
- basch 7y ago
  My understanding of investing savings is that it is still diversified, not all in on the S&P500. Something like the golden butterfly with a cash component, would allow you to spend the cash first. Then you could choose if you want to deplete an asset that hasn't plummeted, or withdraw from each category equally. https://portfoliocharts.com/portfolio/golden-butterfly/ https://portfoliocharts.com/portfolio/golden-butterfly/ You could also use something like a Line of Credit against your stock. Both Schwab and M1 offer it. That way you can spend in an emergency, and hopefully your growth rate offsets the interest rate. https://www.schwab.com/public/schwab/banking_lending/pledged_asset_line https://www.schwab.com/public/schwab/banking_lending/pledged... https://www.m1finance.com/articles-1/portfolio-line-of-credit-guide/ https://www.m1finance.com/articles-1/portfolio-line-of-credi... "With M1 Borrow, you can borrow up to 35% of your invested portfolio at a 3.50% interest rate instantly (2.75% if you are using M1 Plus). There's never been such a low cost, convenient, and flexible way to borrow money."