Any good options for emergency fund besides MM?

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1CEBITN
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Any good options for emergency fund besides MM?

Post by 1CEBITN »

Hi,
I'm looking for a good place to keep my emergency fund besides cash/MM. It's currently in VMRXX but that's no better than the savings account at my bank currently so it's going to get eaten up by inflation. I'm not a huge fan of bond funds for emergency cash because they can lose money but things like VFSUX or VWIUX are about the only places to earn 1-2% right now. What is the going conventional wisdom for an emergency fund?
exodusNH
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Re: Any good options for emergency fund besides MM?

Post by exodusNH »

1CEBITN wrote: Mon Oct 18, 2021 2:44 pm Hi,
I'm looking for a good place to keep my emergency fund besides cash/MM. It's currently in VMRXX but that's no better than the savings account at my bank currently so it's going to get eaten up by inflation. I'm not a huge fan of bond funds for emergency cash because they can lose money but things like VFSUX or VWIUX are about the only places to earn 1-2% right now. What is the going conventional wisdom for an emergency fund?
You can get ~0.5% in on online high yield savings account.

You can buy $10k of I bonds per SSN for a real 0% return if you can tolerate locking up that money for 12 months.

Those are your options that aren't subject to market risk.
Beach
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Re: Any good options for emergency fund besides MM?

Post by Beach »

Earning 1-2% on an emergency fund is pretty awesome, not sure you can do much better without risk. My .5% at Ally is looking pretty sorry right now compared to that, but at least there is zero risk.

How risky/liquid are those funds you mentioned?
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riverant
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Re: Any good options for emergency fund besides MM?

Post by riverant »

I have a roughly 50/50 tiered emergency fund, mixed evenly between cash and Vanguard's Lifestrategy Growth Income fund. I'm willing to take a bit more risk given where inflation is right now and can compensate by maintaining an extra month or so of expenses in my e-fund.
SmallSaver
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Re: Any good options for emergency fund besides MM?

Post by SmallSaver »

I Bonds. And, as your portfolio and net worth grow, a re-evaluation of just what you mean by emergency fund.
chuckwalla
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Re: Any good options for emergency fund besides MM?

Post by chuckwalla »

I do a couple of swing trades a year with a portion of the emergency fund and call it a day and just sit on it.
DVMResident
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Re: Any good options for emergency fund besides MM?

Post by DVMResident »

This depends on scale of one's portfolio and asset allocation:
  • <1x expenses - just use savings accounts or MM to ensure maximal liquidity and safety
  • 1-4x expenses with some liquidity - iBonds is attractive these days if you can tolerate 1 year lock up
  • At 80/20 portfolio, >5x will start to have a year+ in the fixed asset bucket - no need for a specific emergency fund
Personally, I just keep 6-8 weeks worth of cash in a checking account to manage the day-to-day and rest is in my portfolio.
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Tamarind
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Re: Any good options for emergency fund besides MM?

Post by Tamarind »

HYSA. Depending on your local offerings, the amount of the emergency fund, and your appetite for moving it from place to place, you can get 0.5% (easy) to 3% (limited amount, requires direct deposit, other hoops).
UpperNwGuy
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Re: Any good options for emergency fund besides MM?

Post by UpperNwGuy »

1CEBITN wrote: Mon Oct 18, 2021 2:44 pm I'm looking for a good place to keep my emergency fund besides cash/MM. It's currently in VMRXX but that's no better than the savings account at my bank currently so it's going to get eaten up by inflation.
I keep mine in cash (high yield savings account and certificates of deposit) and let it get eaten up by inflation for the near term. If the inflation lasts, without a corresponding increase in interest rates, then I'll consider adding ITOT to the mix.
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1CEBITN
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Re: Any good options for emergency fund besides MM?

Post by 1CEBITN »

Wow, thanks for all the quick replies, you all are awesome! To answer a few of the great questions:

I've got about 20% of my after tax brokerage account in cash at the moment due to a recent RSU sale so I have way more than is necessary for an emergency fund. I normally am comfortable with 12 months expenses but I've got almost 2 years now so that's a great idea about taking on some risk with half or maybe even 75% of that while still keeping 3 or 6 months of cash in a HYSA. I like VTMFX or VWIUX as a way to add a little return on 25% of that money but not putting it 100% into equities while staying tax-aware. Put the other 50% in VTI per my AA (80/20) since my retirement funds are closer to 70/30 at the moment. Big issues with that?
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Re: Any good options for emergency fund besides MM?

Post by patrick »

You can get 1% or better on checking and savings accounts:

1% with no limit - T-Mobile Money
2% on the first $20,000 - Elements Financial Credit Union, requires 15 withdrawal transactions (bill pays qualify) per month
2.25% on the first $25,000 - Presidential Bank, requires $500 in direct deposits and 7 withdrawal transactions (bill pays qualify) per month, minimum balance $500
3% on 10% of direct deposits - One Finance, max $1,000 per month into the 3% account, the rest only gets 1% but can be spent or withdrawn
3.3% on the first $20,000 - Evansville Teachers Federal Credit Union, requires 15 debit card purchases per month and a monthly electronic deposit
4.07% on the first $7,500 - Genisys Credit Union, requires 10 debit card purchase per month of at least $5 each
5% on the first $500 and 3% on another $3,000 - Service Credit Union
6.17% on the first $1,000 - Digital Credit Union
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willthrill81
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Re: Any good options for emergency fund besides MM?

Post by willthrill81 »

1CEBITN wrote: Mon Oct 18, 2021 3:51 pm Wow, thanks for all the quick replies, you all are awesome! To answer a few of the great questions:

I've got about 20% of my after tax brokerage account in cash at the moment due to a recent RSU sale so I have way more than is necessary for an emergency fund. I normally am comfortable with 12 months expenses but I've got almost 2 years now so that's a great idea about taking on some risk with half or maybe even 75% of that while still keeping 3 or 6 months of cash in a HYSA. I like VTMFX or VWIUX as a way to add a little return on 25% of that money but not putting it 100% into equities while staying tax-aware. Put the other 50% in VTI per my AA (80/20) since my retirement funds are closer to 70/30 at the moment. Big issues with that?
Back when we had an EF, we kept one-third of it in literal paper cash in a secure location and the other two-thirds in Wellesley Income fund. That fund's largest annual drawdown in its ~50 year history has been about -10%, and we were comfortable with that level of volatility. It worked out well for us.
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anon_investor
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Re: Any good options for emergency fund besides MM?

Post by anon_investor »

willthrill81 wrote: Mon Oct 18, 2021 4:03 pm
1CEBITN wrote: Mon Oct 18, 2021 3:51 pm Wow, thanks for all the quick replies, you all are awesome! To answer a few of the great questions:

I've got about 20% of my after tax brokerage account in cash at the moment due to a recent RSU sale so I have way more than is necessary for an emergency fund. I normally am comfortable with 12 months expenses but I've got almost 2 years now so that's a great idea about taking on some risk with half or maybe even 75% of that while still keeping 3 or 6 months of cash in a HYSA. I like VTMFX or VWIUX as a way to add a little return on 25% of that money but not putting it 100% into equities while staying tax-aware. Put the other 50% in VTI per my AA (80/20) since my retirement funds are closer to 70/30 at the moment. Big issues with that?
Back when we had an EF, we kept one-third of it in literal paper cash in a secure location and the other two-thirds in Wellesley Income fund. That fund's largest annual drawdown in its ~50 year history has been about -10%, and we were comfortable with that level of volatility. It worked out well for us.
What do you do now for your EF?
Robert20
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Re: Any good options for emergency fund besides MM?

Post by Robert20 »

Keeping money in CDs/HYSA etc are old methods. They give <1% returns.

Use income ETFs which has downside protection with 7-10% dividends. I keep 50% of my EF in JEPI (earlier I used to keep in VTEB and VTIP).
twr
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Re: Any good options for emergency fund besides MM?

Post by twr »

We’ve had our 6-month emergency fund invested in VTMFX (Vanguard Tax-Managed Balanced Fund) for about 4-5 years now, and we’ve seen it grow to a 10-month emergency fund in that time without adding anything to it.
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Re: Any good options for emergency fund besides MM?

Post by willthrill81 »

anon_investor wrote: Mon Oct 18, 2021 6:14 pm
willthrill81 wrote: Mon Oct 18, 2021 4:03 pm
1CEBITN wrote: Mon Oct 18, 2021 3:51 pm Wow, thanks for all the quick replies, you all are awesome! To answer a few of the great questions:

I've got about 20% of my after tax brokerage account in cash at the moment due to a recent RSU sale so I have way more than is necessary for an emergency fund. I normally am comfortable with 12 months expenses but I've got almost 2 years now so that's a great idea about taking on some risk with half or maybe even 75% of that while still keeping 3 or 6 months of cash in a HYSA. I like VTMFX or VWIUX as a way to add a little return on 25% of that money but not putting it 100% into equities while staying tax-aware. Put the other 50% in VTI per my AA (80/20) since my retirement funds are closer to 70/30 at the moment. Big issues with that?
Back when we had an EF, we kept one-third of it in literal paper cash in a secure location and the other two-thirds in Wellesley Income fund. That fund's largest annual drawdown in its ~50 year history has been about -10%, and we were comfortable with that level of volatility. It worked out well for us.
What do you do now for your EF?
We don't believe we need one anymore. We're well insured, sudden unemployment isn't possible for me, and our portfolio is at about 10x.
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anon_investor
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Re: Any good options for emergency fund besides MM?

Post by anon_investor »

willthrill81 wrote: Mon Oct 18, 2021 6:45 pm
anon_investor wrote: Mon Oct 18, 2021 6:14 pm
willthrill81 wrote: Mon Oct 18, 2021 4:03 pm
1CEBITN wrote: Mon Oct 18, 2021 3:51 pm Wow, thanks for all the quick replies, you all are awesome! To answer a few of the great questions:

I've got about 20% of my after tax brokerage account in cash at the moment due to a recent RSU sale so I have way more than is necessary for an emergency fund. I normally am comfortable with 12 months expenses but I've got almost 2 years now so that's a great idea about taking on some risk with half or maybe even 75% of that while still keeping 3 or 6 months of cash in a HYSA. I like VTMFX or VWIUX as a way to add a little return on 25% of that money but not putting it 100% into equities while staying tax-aware. Put the other 50% in VTI per my AA (80/20) since my retirement funds are closer to 70/30 at the moment. Big issues with that?
Back when we had an EF, we kept one-third of it in literal paper cash in a secure location and the other two-thirds in Wellesley Income fund. That fund's largest annual drawdown in its ~50 year history has been about -10%, and we were comfortable with that level of volatility. It worked out well for us.
What do you do now for your EF?
We don't believe we need one anymore. We're well insured, sudden unemployment isn't possible for me, and our portfolio is at about 10x.
Do you keep any fixed income as a proxy for an EF?
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Re: Any good options for emergency fund besides MM?

Post by willthrill81 »

anon_investor wrote: Mon Oct 18, 2021 7:50 pm
willthrill81 wrote: Mon Oct 18, 2021 6:45 pm
anon_investor wrote: Mon Oct 18, 2021 6:14 pm
willthrill81 wrote: Mon Oct 18, 2021 4:03 pm
1CEBITN wrote: Mon Oct 18, 2021 3:51 pm Wow, thanks for all the quick replies, you all are awesome! To answer a few of the great questions:

I've got about 20% of my after tax brokerage account in cash at the moment due to a recent RSU sale so I have way more than is necessary for an emergency fund. I normally am comfortable with 12 months expenses but I've got almost 2 years now so that's a great idea about taking on some risk with half or maybe even 75% of that while still keeping 3 or 6 months of cash in a HYSA. I like VTMFX or VWIUX as a way to add a little return on 25% of that money but not putting it 100% into equities while staying tax-aware. Put the other 50% in VTI per my AA (80/20) since my retirement funds are closer to 70/30 at the moment. Big issues with that?
Back when we had an EF, we kept one-third of it in literal paper cash in a secure location and the other two-thirds in Wellesley Income fund. That fund's largest annual drawdown in its ~50 year history has been about -10%, and we were comfortable with that level of volatility. It worked out well for us.
What do you do now for your EF?
We don't believe we need one anymore. We're well insured, sudden unemployment isn't possible for me, and our portfolio is at about 10x.
Do you keep any fixed income as a proxy for an EF?
No.

If house burns down, we're out $1k. If our car is demolished and it's our fault, we're out $500. We're well insured on all fronts. While we don't have a dedicated EF beyond about 1 month's expenses in hard cash, we do have an irregular & non-monthly expense fund that typically has at least a couple of months' expenses in it.
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anon_investor
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Re: Any good options for emergency fund besides MM?

Post by anon_investor »

willthrill81 wrote: Mon Oct 18, 2021 7:54 pm
anon_investor wrote: Mon Oct 18, 2021 7:50 pm
willthrill81 wrote: Mon Oct 18, 2021 6:45 pm
anon_investor wrote: Mon Oct 18, 2021 6:14 pm
willthrill81 wrote: Mon Oct 18, 2021 4:03 pm

Back when we had an EF, we kept one-third of it in literal paper cash in a secure location and the other two-thirds in Wellesley Income fund. That fund's largest annual drawdown in its ~50 year history has been about -10%, and we were comfortable with that level of volatility. It worked out well for us.
What do you do now for your EF?
We don't believe we need one anymore. We're well insured, sudden unemployment isn't possible for me, and our portfolio is at about 10x.
Do you keep any fixed income as a proxy for an EF?
No.

If house burns down, we're out $1k. If our car is demolished and it's our fault, we're out $500. We're well insured on all fronts. While we don't have a dedicated EF beyond about 1 month's expenses in hard cash, we do have an irregular & non-monthly expense fund that typically has at least a couple of months' expenses in it.
So you are 100% equities? Where do you keep this non-emergency/unexpected expense fund? HYSA?

Personally, my EF evolved once I hit 2x annual expenses in taxable, I started shifting my EF from HYSA and no penalty CDs to I Bonds. I count my EF as part of my overall AA now.
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Re: Any good options for emergency fund besides MM?

Post by Nate79 »

We are using HMBradley @3% (invite only now so hard to get in), checking account and short term bond fund, and are also buying some ibonds. Ibonds are not good as an emergency fund unless you have 2x the amount you need keeping 1x in savings to overcome the 1 year lockup period. Locking up your emergency fund is essentially saying you don't have an emergency fund.
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Re: Any good options for emergency fund besides MM?

Post by willthrill81 »

anon_investor wrote: Mon Oct 18, 2021 8:21 pm
willthrill81 wrote: Mon Oct 18, 2021 7:54 pm
anon_investor wrote: Mon Oct 18, 2021 7:50 pm
willthrill81 wrote: Mon Oct 18, 2021 6:45 pm
anon_investor wrote: Mon Oct 18, 2021 6:14 pm

What do you do now for your EF?
We don't believe we need one anymore. We're well insured, sudden unemployment isn't possible for me, and our portfolio is at about 10x.
Do you keep any fixed income as a proxy for an EF?
No.

If house burns down, we're out $1k. If our car is demolished and it's our fault, we're out $500. We're well insured on all fronts. While we don't have a dedicated EF beyond about 1 month's expenses in hard cash, we do have an irregular & non-monthly expense fund that typically has at least a couple of months' expenses in it.
So you are 100% equities? Where do you keep this non-emergency/unexpected expense fund? HYSA?

Personally, my EF evolved once I hit 2x annual expenses in taxable, I started shifting my EF from HYSA and no penalty CDs to I Bonds. I count my EF as part of my overall AA now.
Yes, and HYSA.
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anon_investor
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Re: Any good options for emergency fund besides MM?

Post by anon_investor »

willthrill81 wrote: Mon Oct 18, 2021 10:39 pm
anon_investor wrote: Mon Oct 18, 2021 8:21 pm
willthrill81 wrote: Mon Oct 18, 2021 7:54 pm
anon_investor wrote: Mon Oct 18, 2021 7:50 pm
willthrill81 wrote: Mon Oct 18, 2021 6:45 pm

We don't believe we need one anymore. We're well insured, sudden unemployment isn't possible for me, and our portfolio is at about 10x.
Do you keep any fixed income as a proxy for an EF?
No.

If house burns down, we're out $1k. If our car is demolished and it's our fault, we're out $500. We're well insured on all fronts. While we don't have a dedicated EF beyond about 1 month's expenses in hard cash, we do have an irregular & non-monthly expense fund that typically has at least a couple of months' expenses in it.
So you are 100% equities? Where do you keep this non-emergency/unexpected expense fund? HYSA?

Personally, my EF evolved once I hit 2x annual expenses in taxable, I started shifting my EF from HYSA and no penalty CDs to I Bonds. I count my EF as part of my overall AA now.
Yes, and HYSA.
That makes sense, no sense taking more risk on that side cash since you are already 100% equities. :beer
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Re: Any good options for emergency fund besides MM?

Post by Pu239 »

willthrill81 wrote: Mon Oct 18, 2021 7:54 pm
No.

If house burns down, we're out $1k. If our car is demolished and it's our fault, we're out $500. We're well insured on all fronts. While we don't have a dedicated EF beyond about 1 month's expenses in hard cash, we do have an irregular & non-monthly expense fund that typically has at least a couple of months' expenses in it.
Disability for > a couple of months?
Between the idea And the reality...Between the motion And the act...Falls the Shadow - T. S. Eliot
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willthrill81
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Re: Any good options for emergency fund besides MM?

Post by willthrill81 »

Pu239 wrote: Mon Oct 18, 2021 10:49 pm
willthrill81 wrote: Mon Oct 18, 2021 7:54 pm
No.

If house burns down, we're out $1k. If our car is demolished and it's our fault, we're out $500. We're well insured on all fronts. While we don't have a dedicated EF beyond about 1 month's expenses in hard cash, we do have an irregular & non-monthly expense fund that typically has at least a couple of months' expenses in it.
Disability for > a couple of months?
LTD insurance would replace 60% of my income plus both my and my employer's prior mandatory retirement contributions, 7.5% each, until I reach SS's FRA.
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Pu239
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Re: Any good options for emergency fund besides MM?

Post by Pu239 »

willthrill81 wrote: Mon Oct 18, 2021 10:59 pm
Pu239 wrote: Mon Oct 18, 2021 10:49 pm
willthrill81 wrote: Mon Oct 18, 2021 7:54 pm
No.

If house burns down, we're out $1k. If our car is demolished and it's our fault, we're out $500. We're well insured on all fronts. While we don't have a dedicated EF beyond about 1 month's expenses in hard cash, we do have an irregular & non-monthly expense fund that typically has at least a couple of months' expenses in it.
Disability for > a couple of months?
LTD insurance would replace 60% of my income plus both my and my employer's prior mandatory retirement contributions, 7.5% each, until I reach SS's FRA.
You've got it covered!
Between the idea And the reality...Between the motion And the act...Falls the Shadow - T. S. Eliot
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peetsperk
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Re: Any good options for emergency fund besides MM?

Post by peetsperk »

I keep half in our credit union savings account earning virtually nothing. The other half is kept at Vanguard in their LifeStrategy Income Fund (VASIX). My hope is any growth will help offset inflation. I've been doing this since approximately 2014 and have been happy with the results. Here is a breakdown of how the fund is invested:

Vanguard Total Bond Market II Index Fund Investor Shares† 56.00%
Vanguard Total International Bond Index Fund Investor Shares 23.60%
Vanguard Total Stock Market Index Fund Investor Shares 11.70%
Vanguard Total International Stock Index Fund Investor Shares 8.00%
Vanguard Total International Bond II Index Fund 0.70%
Marseille07
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Re: Any good options for emergency fund besides MM?

Post by Marseille07 »

willthrill81 wrote: Mon Oct 18, 2021 10:39 pm
anon_investor wrote: Mon Oct 18, 2021 8:21 pm So you are 100% equities? Where do you keep this non-emergency/unexpected expense fund? HYSA?

Personally, my EF evolved once I hit 2x annual expenses in taxable, I started shifting my EF from HYSA and no penalty CDs to I Bonds. I count my EF as part of my overall AA now.
Yes, and HYSA.
Wow. I'm guessing you're 98/2 or maybe 99/1 then, very aggressive :beer
UpperNwGuy
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Re: Any good options for emergency fund besides MM?

Post by UpperNwGuy »

twr wrote: Mon Oct 18, 2021 6:38 pm We’ve had our 6-month emergency fund invested in VTMFX (Vanguard Tax-Managed Balanced Fund) for about 4-5 years now, and we’ve seen it grow to a 10-month emergency fund in that time without adding anything to it.
That's an interesting solution. I think I like it better than the usual Life Strategy solution that is often offered here.
Vanman2
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Re: Any good options for emergency fund besides MM?

Post by Vanman2 »

I’m surprised no one has mentioned short term bonds. We keep half of our emergency fund in VMRXX and half in VBIRX. Thinking of adding VFSTX into the mix. Not huge gains from stb funds but at least a little better than mm. I decided enough gain to be worth the risk.
Last edited by Vanman2 on Tue Oct 19, 2021 9:22 am, edited 1 time in total.
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1CEBITN
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Re: Any good options for emergency fund besides MM?

Post by 1CEBITN »

twr wrote: Mon Oct 18, 2021 6:38 pm We’ve had our 6-month emergency fund invested in VTMFX (Vanguard Tax-Managed Balanced Fund) for about 4-5 years now, and we’ve seen it grow to a 10-month emergency fund in that time without adding anything to it.
Good to hear I'm not the only one who thought that was a good option in an after-tax account. I've also looked at VWIAX (Wellesley) because the upside is similar to VTMFX historically but the downside is -10% at it's worst compared to -20% at worst for VTMFX. The problem with VWIAX is the income it throws off in a taxable account. That's where I am leaning towards keeping a smaller amount in savings for 6 months expenses, move the 12 months I have sitting in a MM into VTMFX, and put the rest into VTI as I sell RSUs over time. That last bit is painful given the market is so high but waiting has risk from inflation also.

I've got target date Vanguard retirement funds managing the AA to 70/30 in my retirement accounts so that strategy would get me closer to my desired 80/20 AA overall without as many tax consequences or as much risk while still maintaining some liquidity.
frugalor
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Re: Any good options for emergency fund besides MM?

Post by frugalor »

twr wrote: Mon Oct 18, 2021 6:38 pm We’ve had our 6-month emergency fund invested in VTMFX (Vanguard Tax-Managed Balanced Fund) for about 4-5 years now, and we’ve seen it grow to a 10-month emergency fund in that time without adding anything to it.
I did a quick look on historical data. It seems this fund is not too sensitive to interest rate for inflation fear, is that right? Any reason for this?
DesertGator
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Re: Any good options for emergency fund besides MM?

Post by DesertGator »

It's interesting to hear several of you are using balanced funds or similar funds with bonds in your EF; it would seem taxation of interest at ordinary rates would really trim the attraction for many of you but that doesn't seem to have come up. Are you really earning, after taxes, much more than the "safer" FDIC insured MM or online savings account rates?
exodusNH
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Re: Any good options for emergency fund besides MM?

Post by exodusNH »

DesertGator wrote: Tue Oct 19, 2021 11:49 am It's interesting to hear several of you are using balanced funds or similar funds with bonds in your EF; it would seem taxation of interest at ordinary rates would really trim the attraction for many of you but that doesn't seem to have come up. Are you really earning, after taxes, much more than the "safer" FDIC insured MM or online savings account rates?
It probably depends on your definition of "earning". They have the paper capital gains in addition to the dividend income. (And, of course, the risk of paper capital loss.) VTMFX has a SEC yield of less than 1%. If someone doesn't think about taxes for earning 1% on a savings account, there's no reason this is any different. Even if it were yielding 4% and your emergency fund were $25000, that's only an additional ~$1000 of income. It could be an issue if you're skirting under certain income cliffs, but otherwise is trivial.
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Re: Any good options for emergency fund besides MM?

Post by cbs2002 »

To me "emergency fund" means cash I can put my hands on tomorrow at the same price it is at today, i.e. not index funds. Chasing short-term interest rate yield for this does not seem worth the trouble. The gains will be invisible as part of your total portfolio in the long term.

I raised an approximately 6-month cash reserve in a savings account over the last couple years. Thanks to this forum, I have re-evaluated the need for that given our portfolio size. Just this week I am opening our first-ever Treasury Direct accounts and plan to max out purchases of I Bonds for 2021 and 2022. I'll consider them part of our bond allocation and a way to balance risk away from longer-term bond funds. I'm also going to identify within our portfolio the assets we would use to raise cash in the next 1-2 years for things like buying a car, moving, etc. and how we would use them depending on market behavior at the time.

If there was ever a true emergency (e.g. lost my job, house burned down), I could cover expenses with open credit and then shuffle the portfolio around and raise cash.

I plan to hold enough in cash to cover planned upcoming expenses like property taxes, home and car repairs, and travel, plus 1-2 months to cover my regular expenses. That cash won't earn much of anything and that's fine.
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Re: Any good options for emergency fund besides MM?

Post by twr »

UpperNwGuy wrote: Tue Oct 19, 2021 7:08 am
twr wrote: Mon Oct 18, 2021 6:38 pm We’ve had our 6-month emergency fund invested in VTMFX (Vanguard Tax-Managed Balanced Fund) for about 4-5 years now, and we’ve seen it grow to a 10-month emergency fund in that time without adding anything to it.
That's an interesting solution. I think I like it better than the usual Life Strategy solution that is often offered here.
We were actually debating between the Life Strategy and this one, in the end the tax advantaged nature won us over.
twr
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Joined: Fri Jan 17, 2020 12:08 am

Re: Any good options for emergency fund besides MM?

Post by twr »

frugalor wrote: Tue Oct 19, 2021 11:39 am
twr wrote: Mon Oct 18, 2021 6:38 pm We’ve had our 6-month emergency fund invested in VTMFX (Vanguard Tax-Managed Balanced Fund) for about 4-5 years now, and we’ve seen it grow to a 10-month emergency fund in that time without adding anything to it.
I did a quick look on historical data. It seems this fund is not too sensitive to interest rate for inflation fear, is that right? Any reason for this?
We didn’t really look much into that as a factor. We wanted something that could earn more than a standard savings account, was less risky than going for a higher stock allocation, and finally something that wouldn’t pay out a lot every year hitting us with taxes.
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