The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: Dinibal on December 29, 2014, 11:25:30 AM
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Is your strategy more LT and less risk focused or is it more short term focused?
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My emergency fund is 3 months expenses that I keep in cash. I have cash in my brokerage account too, but that's in my mind "funds available for trading." I like to have that distinction. Within the brokerage account I mentally have to divide money into long, medium, and short term buckets based on my current situation.
If you're asking what to do with short-term money, I read an interesting article (the link doesn't work anymore unfortunately) about maintaining cash-equivalent funds to deal with inflation, strength of the dollar, etc. They were index funds mostly invested in bonds, TIPS, and other low-risk investments so that at least you're earning a little bit of interest. Here's a few: BND, BSV, CYB, UDN, TIP, SHY.
But personally I didn't find the short-term yield to be worth it, so if I need the money within a year it's mostly cash.
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The real purpose of an emergency fund is the only remaining financial mystery to me. Keeping between 1k-3k in checking account did the job for me until now (42 years old). I got regular income, low expenses, 180k available with HELOC + LOC. I don't count the 25k CC that could be usefull for few weeks with no interest. If shit happen, I will delay the stashing process for a little while (stashing 3k/month)