Author Topic: Strategy for Emergency fund  (Read 2199 times)

fb132

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Strategy for Emergency fund
« on: October 12, 2014, 06:11:37 PM »
To start off, yes I still live with my parents, so my expenses are low atm which is perfect because I can boost my savings to buy a condo (cash), but when it comes to my emergency fund atm, this is where I am stuck. As of now, whatever money I have leftover (normally it is around 40-50% of my income) is split in 3 (long term investments aka retirement money, mid term investments and short term aka EF). Now that money that goes to short term, since I live with my parents at this moment, what is my best strategy??
Should I:
A) Leave 2K$ in a high interest account and beyond that put it in an index mutual fund (30% equity/70% bonds)
B) Just leave it in my high interest account(which can be 5-10 years, all depends how many times Murphy shows up at my door step)
C) Save 4K$ and put the rest of my money with my mid term investments (60% stocks/40% bonds aka mid term investments). Why 4K$??? That's the most I had to pay for Murphy in the past 5 years.

Left

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Re: Strategy for Emergency fund
« Reply #1 on: October 12, 2014, 06:23:54 PM »
sounds good, but you didn't say how much the emergency fund is compared to your expenses/income. if you can make 4k in a week, then it would be enough. if you need 6 months to save for it then not. or if your expenses are 4k a week.... etc.

i keep a year's worth of income as my emergency fund. i know i lose out on investing it but i want that much there myself.

fb132

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Re: Strategy for Emergency fund
« Reply #2 on: October 12, 2014, 06:38:44 PM »
Well it is tough to put a number, because it all depends on how much my parents need from me (they have money issues, so I help them out when they need it):

If we take this month for example
Essentials($/month):
-My rent to my parents: 300$ (saves me more than if I were in an appartment)
Electricity: 189,54$ (Sometimes I pay this part, but most of the time my parents pay the electric bill)
Groceries: 200$ (This is low, mainly because my lunch and supper are leftovers from my parents supper, the food I buy are for my breakfast, 2 snacks, fruits & Veggies, any food that has protein..yes I workout)
Bus Pass: 75,50$
Total: 765,04

My Lifestyle:
Gym Membership + Trainer: 140$ (I know this high, but that is my only luxury really)
Prescription: 47,60$
Blow Money: 200$

Total: 387,60$

Essentials (765,04$) + Lifestyle (387,60$) = 1152,64$

Which leaves me 775$ in which I invest:
Long Term: 258,33$
Mid Term: 258,33$
Short Term: 258,33$

To Eyem: the 4K$ number I came up with is when I had to pay for our roof to be repaired. That is why I chose 4K$, because my essentials are not like someone who lives in their own home, it is more to cover a large unexpected expense like the roof.

foobar

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Re: Strategy for Emergency fund
« Reply #3 on: October 12, 2014, 06:40:32 PM »
if you investments are big enough so that with a 50% loss they would be enough to cover you needs, you don't need an emergency fund.  The bonds in your portfolio end up serving that purpose.

200 a month on blow seems like a pretty cheap blow habit:)

fb132

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Re: Strategy for Emergency fund
« Reply #4 on: October 12, 2014, 06:43:02 PM »
My investments are big mostly on the retirement side. I would say a huge chunk of my net worth is in it. My emergency fund right now is at 1,7K$. I simply don't know if I should go over 2K$ or not since I don't own my own home yet and saving for one with my mid term investment.