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Emergency Fund

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Do you keep your emergency fund in a simple Savings Account or a Money Market Fund?

Why?

I'm thinking of putting my 10k Rainey day fund in a Vanguard Money Market Fund, but I'm worried about whether or not I can withdraw at a moment's notice, or how that would work.
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In my mattress.
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Invest it. Unless you buy shitcoins or meme stocks you can always get the cash within 24 hours.

If you need home repairs car repairs or emergency medical $$ just put it on a credit card and pay it off the next business day.
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>>1748964
I have 4500 online savings, and put 5500 in roth. I also have a savings account that I let build up to invest or make big purchases.
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>>1748964
I have other money I'm investigating. I want this money absolutely liquid, with no fees from any withdrawal. I want to know if something like the Vanguard Prime Money Market Fund is good for this.
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>>1748971
The idea of an emergency fund is in case your investments are all bleeding red. So you don't sell at a loss if you need a few thousand all the sudden. Like if you get sued.
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Savings account, some of it even checking account. Then again, I run a business, so I need several 10k in liquidity every month anyway.

But I agree with >>1748971
Keep 2k liquid for small emergencies and the rest available within 2 business days (i.e. any time deposits you can terminate early or ETFs).
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>>1748992
>I want to know if something like the Vanguard Prime Money Market Fund is good for this.
Yes.

The only potential issue is the 2-3 days it takes to transfer funds to your checking account to actually make a payment to someone. In most circumstances, this isn't a problem. Very few emergencies require you to make large payments in a 24-72 hour timeframe. However, you might consider putting *some* of your emergency money into a money market savings or interest bearing checking account with your bank so that its available on demand.

Protip: This will also help you avoid fees at your bank, since many banks waive fees if you maintain certain balance levels.
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I keep a minimum buffer of 1x monthly expenses in my savings account

The rest - 6mo of expenses working way up to 6mo of income in Betterment Safety Net.

This gives me a balance between liquid and opportunity cost on my investment hedging against inflation which banks doesn't offer enough.
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>>1748964
I keep my emergency fund in an FDIC-insured savings account like a sensible person.

Note that money market ACCOUNTS are FDIC-insured, but money market FUNDS are not.

If you have a suitable line of credit then there's nothing wrong with keeping your emergency fund in a money market account, since you can use credit to cover your emergency expenses while you wait for your money market account withdrawal to go through.

Do not invest your emergency fund. That defeats the purpose entirely. You do not want to be forced to sell an investment during a downturn to cover an emergency expense.

So, in your specific case, I would determine whether the Vanguard Money Market Fund is FDIC-insured (if it's a fund as the name implies, it's not) and, if so, what advantages it has over a savings account and, finally, whether you have suitable credit to cover short-term expenses.

If you're looking for slightly better returns, you could always set up a CD ladder, but that's another story entirely.
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>>1749028
I respect your commitment to safety, but your comments about the importance of FDIC insurance are completely wrong. Mutual funds, including money market funds, are protected by the Securities Investor Protection Corporation (SIPC), which protects securities customers of its members up to $500,000 (including $250,000 for claims for cash).

Additionally, many companies, including Vanguard, also purchase third-party investor insurance that goes even further than the SIPC. https://investor.vanguard.com/investing/account-protection

tl;dr A money market account is just as safe or safer than a deposit account.
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>>1749052
>SIPC
Not really relevant. FDIC protects against loss of value, SIPC does not.

>third-party investor insurance
What is AIG.

>money market account is just as safe
Yes, but a money market fund is a different thing and not as safe.
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>>1749069
>Not really relevant. FDIC protects against loss of value, SIPC does not.
Money market securities don't decline in value. They're designed to have a constant NAV.

>What is AIG.
So you'd rather have no third-party insurance, like your bank? Personally I'd rather have it.

>a money market fund is a different thing and not as safe.
I've been explaining to you why this is a false statement. You seem to somehow forgotten the topic of our conversation during the time it took you to write your post.

Look, anon, you can do whatever you want with your money. But don't come to the board with falsehoods, half-truths, and alarmist bullshit. Money market funds are just as safe if not safer than bank deposit accounts.

Bonus Fact: No investor has ever lost money due to the liquidation of a U.S. mutual fund. LOTS of investors have lost money due to the failure of U.S. banks.
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>>1748964
You'd be a fucking moron if you put your EMERGENCY fund in something that doesn't allow you to access it immediately.

Holy shit this board is so fucking stupid. Get your shit together OP.

Emergency fund is immediately accessible. Keep it in checking or cash.
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just have a savings account
bsv is almost as good as a money market fund if you can hold some volatility,
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>>1749103
>You'd be a fucking moron if you put your EMERGENCY fund in something that doesn't allow you to access it immediately.
And you're a fucking moron for thinking that an emergency fund is supposed to be "mad money" that you might spend all at once. It's intended to cover your living expenses over many months in case your primary source of income gets interrupted.

Many people much smarter than you safely and reasonably put portions of their emergency fund into illiquid CD ladders because they know that the money will become available and liquid if the "emergency" persists.

If you need 100% of your emergency fund to be fully liquid and instantly available then your emergency fund isn't large enough.
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>>1749129

My real investments are in Vanguard. My emergency fund is enough to cover 2 years worth of basic living expenses and my insurance out-of-pocket maximum just in case anything major medical would happen. $30k in a 1% Capital One money market, and $30k in a 1.25% 1-Year CD. I have an extremely low cost of living where I live, so even 30 counts in extra spending money.
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>>1749129

you don't seem to grasp the concept of emergency.
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>>1749320
Sounds good to me. Two years is a lot of coverage, but I never fault anyone for being cautious. Especially since I keep about two years in cash myself.

>>1749325
And you don't seem to grasp the purpose of an emergency fund. It's not a cookie jar you bust open because you got the munchies. It's self-funded income insurance in case you lose your job, get sick, or otherwise experience a prolonged interruption with your incoming cashflows. Yes, it can also help with one-time unanticipated financial needs. But by definition you can't plan for those and you can't size your savings to account for them. By contrast, you CAN plan for a job transition or layoff, and you can size your emergency savings based on your actual cost of living expenses.
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The sense I'm getting is that I should have two emergency funds: one in a savings account (maybe like $2.5k) if my car breaks down and I need a new one ASAP or some such incident.

The other should be in either a Money Market Account or a Money Market Fund (the difference I am still not understanding as I am new to all of this, but I will research) for situations like the loss of my job which may require monthly withdrawals. Honestly 2-3 days does not seem bad.

My question is, are these withdrawals penalty free? Can I withdrawal all if it? What kind of meager returns can I expect? Do any of you have direct experience with Money Market Account/Funds?
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>>1749129
It's not just in case you lose your job. It's in case your investments shit the bed during a recession. You have cash to buy a replacement car, settle a lawsuit, pay some copay for a huge medical bill, ect, without selling stocks at a considerable loss.

Even worse is being unemployed and then forced to sell stock at a loss, you can't even write off your stock losses for tax purposes if you're not even taxed anything because you have no income. This is about recessions and bear-markets.

Savings account or money market account (not a money market fund!) are the only good answers. Some will say 30 year T-bonds are cash equivalents but bonds are garbage right now and nobody wants them like they usually would.

Living expenses should not be very expensive at all anyways, but if you have like 8 kids and a wife and you lease some penthouse or baller mansion you pay need to reconsider your life choices anyways.

>>1749320
Two years expenses are too much. I'd put half of that into a very thinly traded or boring dividend-paying stock like an MLP or utility or something that won't shit the bed but still provides some income.
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>>1749335
Any cash savings you set aside all collectively count. Whether you choose to make some of them more or less liquid and available depends on how much protection you prefer.

>>1749336
>It's in case your investments shit the bed during a recession.
Uggh, no. You're explaining one of the benefits of an emergency fund, not the reason for having one in the first place.

>Also, capital loss carryovers are a thing. Please stop giving bad advice. Please.
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>>1749335

The thing is for me, my emergency fund is completely liquid. I have an online Capital One checking along with the money market. Transfer is instant within the bank, so I could access the $30k via checks or a debit card if I'd ever need it right now, and breaking the other $30k CD requires a whopping 3 months of interest if push came to shove. I do keep a grand or two in my home safe though just to have a little cash on hand.

>>1749336

>It's not just in case you lose your job. It's in case your investments shit the bed during a recession.

This makes no sense. Why would you need to pull money from investments ever if you have a stable buffer of cash-on-hand?

>Two years expenses are too much. I'd put half of that into a very thinly traded or boring dividend-paying stock like an MLP or utility.

Two years expenses are well in-line with a conservative investor like myself. What is this suggestion though? You would put essentially safe money into a single equity? What?

Just how much money do you personally have invested in the market?
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>>1749337
>>1749342
The idea is that you don't have all of your money except your beer-money day-to-day checking all tied up in investments. Then you are basically living paycheck to paycheck only with wealth tied up to the whims of the market.

I have 70k in investments, which includes about 4k in a money market account my broker sticks all my unsettled funds into. This is slush money to buy stocks with though. I have 10k in savings, which can last me 5 months and normally 5k in checking.

This is chump-change run of the mill retail investor numbers so don't take me as an example if you are a millionare or have like 1k saved in a savings account.

I put about 20% of my stock investments in very boring, stable utilities and MLPs not listed on major indexes that pay dividends, are immune to recession and are basically cash with a 3-4 day waiting period. I consider that a cash equivalent for my purposes. It'd be a bummer to sell them, but it'd be a dire emergency, after all.
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>>1749350

You have 70k in investments? How much of that is in IRA/Roth or 401k?
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OP here: just looked into my current Credit Union, this is what they offer:
Money Market Account at .20%
Should I go for it? Pros/Cons?

Doesn't seem that much more than just a Savings (.15%)
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>>1749356

Capital One 360 money market is 1% if you have 10k+. Their online savings accounts are .75%, and you can also open a checking account with a free debit card and checks.

Ally bank I think has 1% savings too, I think. Online banking options are your only real bet to get a an okay interest rate. Almost all brick and mortar will give you lower returns.

That said, a lot of online banks would probably fit your needs, so long as they have FDIC and good rates. The only reason I'm pimping Capital One is because I've never had issues with their online bank, and I've used them since 2008 (when it was ING Direct).
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>>1749354
About 10%, desu. I think index mutual funds are great but I suspect a recession in the next year or two and S&P 500 is mostly banks and automotive companies and shit I do not want exposure with when the next bear market hits.

I don't invest so much as I trade stocks since I have the free time and don't think buy-and-hold is necessarily the best way forward if you know how to pick and trade stocks. With an index you buy a lot of losers, like GM and Citibank, which I'd rather avoid exposure to unless it's a roaring bull market starting from the bottom of a recession.
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>>1749366

Wait, you only have 7k in tax-sheltered accounts? Things are starting to make more sense now.

>I think index mutual funds are great but I suspect a recession in the next year or two.

I'm not sure what this has to do with IRA and tax sheltered accounts though. You can still have individual stocks.

Is your broker a fiduciary? Are you being charged purchase fees on your stocks?

>I have the free time and don't think buy-and-hold is necessarily the best way forward if you know how to pick and trade stocks.

What is your finance background?
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>>1749377
I don't make enough money to be bothered with much taxes for short-term capital gains, pay nothing on dividends. I make enough to be bothered with fees withdrawing from a tax-free IRA in a mutual fund, though. I make more money as an active investor with swing and positional trades then I would if it sat in some IRA mutual fund tracking dog-shit companies.

I trade stocks to make money not to save for retirement, grandpa.

My finance background? You trying to hire me? I'm a pleb retail investor like I said, I work at a tank farm, I make returns on investment around 12%/ year.
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>>1749394
>I make more money as an active investor with swing and positional trades then I would if it sat in some IRA mutual fund tracking dog-shit companies.
MFW people say shit like this unironically. No wonder your finances are such a mess.

>You trying to hire me?
I think he's trying to find out where you went wrong, as in: what part of your financial education failed you so badly?
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>>1749500
Okay, I guess that ROI is a joke and I don't know what I'm doing. Making money beyond 7% annual is secondary to a tax-free low-cost index-tracking mutual fund.

Whatever. I make money, beyond what the S&P would. What's your problem?
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>>1749555
>I guess that ROI is a joke and I don't know what I'm doing.
Well, considering that you apparently don't even know the difference between your gross return and your ROI, I'm going to stand by my assessment of your financial ignorance.

But by all means, please continue to roleplay on an anonymous message board, anon. Tell us again how you're a special snowflake and a statistical outlier, and how easy it is to outperform the markets because you have so much "free time." Give us more facts about emergency funds that are not only false, but literally nonsensical. Make more market timing predictions and give us more stock picking tips. We're all so very impressed by your lies and bullshit.
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>>1749608
I guess I'm lucky. I dunno how much Dave Ramsey Kool-Aid you've consumed but there is merit in riskier investments. Not just fucking putting all your wealth into an 'emergency fund' to last two goddamn years, buying some gold coins under your mattress, putting on a crash helmet and shivering in fear in your basement.

I don't really care that you think I'm play-pretending or not. It's not that difficult to outperform the stock market, during a bull run like it has been for the last 8 years.

You can outperform the fucking S&P 500 by buying a Russell 2000 index fund, ffs, that'd have returned on average 11% in the last year. I barely did better than that.
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>>1749662
Someone's getting pretty defensive after getting called out on his bullshit. I never said anything about risk, gold, mattresses, crashes, or basements. Looks like you're just projecting here.

>Russell 2000 index fund, ffs, that'd have returned on average 11% in the last year.
Hehe. Thanks for this, honestly. Sometimes you idiots just make this so easy....

The Russell 2000 returned 37.34% last year, not 11%.

>I barely did better than that.
You did barely better than 11% last year? What a colossal fuckup! Even the stodgy S&P 500 (the fund you hate so much) returned 24.86% last year.

http://news.morningstar.com/index/indexReturn.html

You suck at investing. Period. End of story. Mic drop.

Maybe if you spent a little more time building your financial knowledge and a little less time roleplaying, you'd be less of a poorfag.

Thanks for the chuckle, anon.
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>>1749667
11% is the average annual return for the Russell 2000. Lately it's done better. I don't suck at investing, I did better than S&P 500l, probably at tremendously more risk, but I still outperformed it. Fucking BlackRock investments did -27% this year on it's investments, so I can't be that retarded.

I'm not role-playing. either, I'm the chief regional manager of the world's most elite mercenary company in the world why would I need to role-play on an anonymous Taiwanese motocross website on it's financial instrument trading page about my investments?

Why are you so asspained anyways? You don't call people out for playing pretend here, you take their word at it's face value and use it as an educational experience. Maybe you don't belong here.
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>>1749681
>so I can't be that retarded
Don't sell yourself short. Your posts tell a different story.

>the world's most elite mercenary company in the world
Navy seal pasta on /biz/? Now I've seen everything.

Thanks again anon. You may be financial cancer, but you're god damned funny as hell.
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>>1749692
You're pretty funny too, from whatever quality I can project on you as some entity typing shit in a box. Good luck with your mutual fund and Coca-Cola company stock and two years worth of cash rotting away in a savings account and whatever dumb-ass shit you invest in.
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I keep 5k in my chequing account for short term emergencies. First 1500 gives me no fees, second 1500 gets me from here to my family quickly and back afterward, remainder is for other expenses just in case.
Long term emergency fund is 25k in a savings account I opened with a separate institution. Covers mortgage and bills for about 8 months, longer once I renegotiate my mortgage next spring and lower the payments.
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>>1748964
there is a weird deposit account at my bank, where if you put your money in there it's pretty liquid you can get out any time it pays some interest not much and you participate in a lottery for half a dozen cars every month.

it's good because i can get out any time unlike bonds and stuff without losing money, and probably not gonna win anything but still there is a chance and there is some interest. slightly better than just letting the money sit on it's ass.
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