Author Topic: VTSAX brokerage is/was part of emergency fund. What to do with it?  (Read 1151 times)

Freedom2016

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Our VTSAX brokerage account is taking a beating, obviously. Looking for advice on whether to move it to cash.

Right now, we have 6 months of living expenses in cash (Ally). Before things crashed, we had another ~8 months of expenses in our brokerage account - now it's about 5 months.

I'm thinking we should sell to build up our cash reserves (capital gains be damned).

I'm a consultant and my work is negatively affected in recessions. DH works for a safety net hospital which may not survive coronavirus.

I think I know the answer to my own question, but would like a sanity check. WWYD?

waltworks

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Re: VTSAX brokerage is/was part of emergency fund. What to do with it?
« Reply #1 on: March 19, 2020, 03:38:35 PM »
I'd let it ride. You put it into a high risk/high return investment with eyes wide open, right?

-W

solon

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Re: VTSAX brokerage is/was part of emergency fund. What to do with it?
« Reply #2 on: March 19, 2020, 03:47:30 PM »
You have 6 months in cash and another 5 months in VTSAX? That's an enviable position!

Morning Glory

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Re: VTSAX brokerage is/was part of emergency fund. What to do with it?
« Reply #3 on: March 19, 2020, 04:04:39 PM »
Leave it alone!!!!!!!!!!!!!!. If you get to the point where you have spent your cash emergency fund then you can cash it out.  The people who did the best in 2008 were those who FORGOT THEY HAD THEIR ACCOUNTS!!!!!!!!

Again, leave it the fuck alone. Log out and quit looking at it.

Freedom2016

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Re: VTSAX brokerage is/was part of emergency fund. What to do with it?
« Reply #4 on: March 19, 2020, 04:22:05 PM »
LOL. Thanks everyone. I am persuaded - we will leave it alone.

I had a panic moment because the fact that DH's employer could realistically go under was in the local papers today. Shit got real, fast.

But - deep breath - this is the whole point of having an investment strategy.  Thanks for helping me get perspective.

waltworks

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Re: VTSAX brokerage is/was part of emergency fund. What to do with it?
« Reply #5 on: March 19, 2020, 04:23:43 PM »
Don't forget that if your DH is laid off, he'll certainly be eligible for unemployment. Everyone looks likely to get a Trump check or two as well.

You're fine. Let it ride.

-W

Paul der Krake

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Re: VTSAX brokerage is/was part of emergency fund. What to do with it?
« Reply #6 on: March 19, 2020, 04:25:08 PM »
Your spouse works in the medical field? If his employer goes under he'll have a new job before lunch.

Freedom2016

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Re: VTSAX brokerage is/was part of emergency fund. What to do with it?
« Reply #7 on: March 19, 2020, 06:38:33 PM »
He's a fundraiser, not a medical professional. I hadn't really considered whether other hospitals would snap up development professionals, but I guess all the hospitals will be needing to raise (more) money...

I'm a red panda

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Re: VTSAX brokerage is/was part of emergency fund. What to do with it?
« Reply #8 on: March 20, 2020, 11:05:19 AM »
I'd let it ride. You put it into a high risk/high return investment with eyes wide open, right?

-W

Since when is VTSAX high risk? 
It probably wasn't a fabulous idea as an emergency fund though.

That said, I'd also let it ride.  If you think the US economy will recover, staying still is the thing to do. If you think it won't; well, we have bigger problems.

But all cashing it in does is solidify the loss. And right now the loss is huge.

NotJen

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Re: VTSAX brokerage is/was part of emergency fund. What to do with it?
« Reply #9 on: March 20, 2020, 11:35:59 AM »
I'd let it ride. You put it into a high risk/high return investment with eyes wide open, right?

-W

Since when is VTSAX high risk? 
Since always?  Vanguard rates it 4/5 for risk.  It's 100% stocks.  Many of us moderate that risk by leaving it alone for 30 years.

J Boogie

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Re: VTSAX brokerage is/was part of emergency fund. What to do with it?
« Reply #10 on: March 20, 2020, 12:21:22 PM »
There are risky categories of investment vehicles, and there are risky sectors, and there are risky companies.

Equities in general are regarded as higher risk when compared to bonds.

Within the vast field of equities, large cap index funds like SPY are among the lower risk options thanks to diversification and size. But compared to bonds index funds are in the high risk category of equities. That doesn't mean high risk like a recently IPO'd biotech startup or a 3x leveraged mortgage REIT (those have had quite a ride in the past few days), but higher risk than (most) bonds.

Freedom2016

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Re: VTSAX brokerage is/was part of emergency fund. What to do with it?
« Reply #11 on: April 03, 2020, 08:16:27 PM »
So...DH was furloughed today and my income is falling like a hammer.

Also, my BIL was tested for covid - results available in a week. Both he and my sister are symptomatic.

Shit got real for us today.




Abe

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Re: VTSAX brokerage is/was part of emergency fund. What to do with it?
« Reply #12 on: April 03, 2020, 09:23:05 PM »
Sorry to hear that. My wife is a part time physician and was furloughed two weeks ago. Sounds insane but that’s happening across the country since no one cares about their uncontrolled diabetes with covid running around. My income barely covers rent, so we’re in a similar boat.

Anyway, I looked at the losses from April 2019 to now and it’s only 6% down. So whatever you had saved up till then has either not lost value or lost <10%. Point being, one year’s beating shouldn’t change your strategy, unless the hard truth is your situation is not amenable to that level of risk. We are 80/20 stocks/bonds for that reason and have sold the bond funds to cover 6 months living expenses (total now 8 months). We’re going to let the stocks rise as they are and recheck in about a year.

I would still stay the course since you have plenty of money on hand, and think of ways to stretch the 6 months of cash out more.

Villanelle

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Re: VTSAX brokerage is/was part of emergency fund. What to do with it?
« Reply #13 on: April 03, 2020, 10:18:40 PM »
I'm sorry to hear all this is coming closer to home.  Still, don't sell.  First, have your DH file for unemployment ASAP.  That should be the only thing he works on.  Next, cut your expenses.  A lot.  Sell what you can.  Then, if you burn through most of that emergency fund, and you have nothing else, sell only as much as you need to get by very short term.  You can always sell more later.  The goal should be to keep as much in the market as you can, for as long as you can. Assuming you don't pay per trade, sell enough for a few weeks, and then a few weeks more as needed. 

Jack0Life

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Re: VTSAX brokerage is/was part of emergency fund. What to do with it?
« Reply #14 on: April 03, 2020, 10:22:22 PM »
You actually made a good choice so far in not pulling out on March 19th.
Dow closed at 19100 on the 19th and the Dow is at 21050 now.