The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: 2023Dreaming on February 20, 2023, 10:32:48 AM
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Hi! I have about 6 months set aside for emergency savings. Should I be putting that into VTI, instead of holding it in a high interest rate savings? Thank you!
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It really depends on your overall assets and risk tolerance. But to call it an emergency fund, it should be held where it has minimal risk, such as your HYSA. I would only consider VTI my emergency plan if I had a couple of years' expenses already built up.
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Since you mention using VTI I assume the EF is at a brokerage. If you can buy Schwab mutual funds commission free then I suggest the Schwab money market fund SWVXX currently yielding a bit over 4%
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I think that I can get it commission free but there is a Net Expense Ratio: 0.340%. Does that seem normal? I do have a Schwab account.
For VTI I am using ETrade.
Right now my emergency fund is at Barclays 3.60% APY.
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Hi! I have about 6 months set aside for emergency savings. Should I be putting that into VTI, instead of holding it in a high interest rate savings? Thank you!
If it's a true emergency fund, in my opinion, no. Imagine having to use your emergency fund because you lost your job in March of 2020 due to the pandemic, that would be horrible. I think a good money market account or high interest savings is the best place for a true emergency fund. I think Dave Ramsey makes a good point that an emergency fund is like insurance, it's going to cost you in opportunity cost but it's right there to protect you from pulling the plug on your investments at the worst possible time(s).
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What are your thoughts about putting it in SWVXX?
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I think that I can get it commission free but there is a Net Expense Ratio: 0.340%. Does that seem normal? I do have a Schwab account.
For VTI I am using ETrade.
Right now my emergency fund is at Barclays 3.60% APY.
I wouldn't be concerned about the ER, the yield shown is after expenses so that is what you get and the share price is alway $1 so it beats the yield on the Barclays fund.
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Thank you so much! I appreciate it!
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VMFXX 4.51%.
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https://earlyretirementnow.com/2021/05/26/the-emergency-fund-is-still-useless/
https://earlyretirementnow.com/2016/05/05/emergency-fund/
https://earlyretirementnow.com/2018/04/18/emergency-fund-in-stocks/
for me, once time passes - the fluctuation in the market does not reduce your emergency fund if it has been in the market for 3-5 or 10 years; have some cash now, 3-12 months, but build a brokerage account and grow that. my emergency fund was invested back in 2013... never looked back... now with the down market my "emergency fund" is 5-10 years.
I now have no real need for a cash emergency fund; but I do keep 3ish months around, but will drop it on VTI that has a significant dip.