Author Topic: VTI Buy Limit Orders from Vanguard Brokerage / Emergency Fund Account  (Read 680 times)

jnw

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I can risk 25% of my emergency fund account in VTI.   So I just setup a few buy limit orders to execute in my Vanguard Brokerage Account, a little over $1000 of buy limit orders currently.  This would pick up VTI at discounts.   If the orders don't execute it's no problem because I am still getting 4.55% return via money market.  Just thought I'd share my idea.  (I've shared this idea before here with mixed reactions, but this time it's in an account earning me near 5% interest, not 0%.)



It's still an emergency fund, I mean I can sell VTI if I have to after I've used up 75% of the cash emergency fund in this account.

EDIT: Currently I have no VTI in my emergency fund, it's all cash.  Ultimately my emergency fund will be about $50k.
« Last Edit: March 22, 2023, 04:01:06 PM by JenniferW »

NWOutlier

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Re: VTI Buy Limit Orders from Vanguard Brokerage / Emergency Fund Account
« Reply #1 on: March 26, 2023, 09:11:42 AM »
I did something similar; but I started VTI in my brokerage account years ago; so even with this market being down, a lot of my purchases are still up 90-100% (e.g almost double to double)... now, I would say 90% of my 'emergency' fund is in my brokerage account and just 1-3 months living expenses in cash.

That 'emergency' fund can now cover my living expenses for more than 5 years.  meaning that is money 'not' in a retirement account, and is available to me at anytime.  so, as your account grows from the limit orders, you can eventually switch to 100% emergency fund in your brokerage.

I have no math to back up my next comment;  but - for me, 180-190 is a good 'bottom' to buy VTI.  @180 you're looking at 25% down from the 241 peak..  so maybe a couple limits below 180 is a nice to have just in case :).  One thing to note; your settlement account with Vanguard is VMFXX @ about 4.5% right now; so even putting the cash in your settlement fund while you have the limit orders is, it's pretty ok also.

I am comfortable at 190 limit - and even 200 assuming what's going on in the news.

BigErn has a few comments on cash emergency funds as well.
https://earlyretirementnow.com/2016/05/05/emergency-fund/
https://earlyretirementnow.com/2021/05/26/the-emergency-fund-is-still-useless/
https://earlyretirementnow.com/2016/05/05/emergency-fund/