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Ask HN: How do you protect your emergency fund from inflation?

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Re: Ask HN: How do you protect your emergency fund from inflation?

#21

Post by fy20 »

iamthemonster wrote: post #5

It probably depends greatly on your personal circumstances but if you are already investing, or have a Home Equity Line of Credit available, or good credit so that you can get credit cards, then it's quite possible that an emergency fund is just not required (or in other words you keep your emergency fund invested) https://earlyretirementnow.com/2021/05/26/the-emergency-fund... I think younger folk or those in a less…

A lot of this is very US specific. Large amounts of credit for cheap with little due diligence is not a thing in Europe. The banks in my country do not even offer home equity loans.

On the other hand your emergency fund needs to be a lot smaller, because of social support provided by the society. If you are unemployed and break a leg, you aren't going to need to pay a $20,000 hospital bill.

Re: Ask HN: How do you protect your emergency fund from inflation?

#22

Post by atemerev »

shmde wrote: post #12
atemerev wrote: post #7

Diversify. Buy some crypto. Some Swiss francs. Emergency food stash. Get some cash. Diversification is protection.

How about a fallout shelter ?

Not yet, I think. And it won't save you without the appropriate public civil defense infrastructure anyway.

Re: Ask HN: How do you protect your emergency fund from inflation?

#23

Post by jpgvm »

gonzo41 wrote: post #19
jpgvm wrote: post #16

Best spot for actual emergency fund if you have a mortgage is in said mortgage redraw account. Most mortgages these days have free online redraw so it offsets the interest you are paying while being completely safe with zero risk and only your local currency volatility.

Check your loan conditions, your bank may have rights to money in excess of scheduled payments. Unless your talking about a specific offset account as opposed to the actual loan account. Not a CPA but got told this advice with regard to larger savings. If the bank has trouble it can snatch up your redraw. YMMV

If my bank is having trouble (by far the largest in my country) I'm beyond fucked and I don't think it will matter much how much of my paid-in-advance funds they can take.

It's sort of like worrying about how living in an apartment building I will probably be incinerated by a nuclear blast hitting my city whereas I could live long enough to witness the end all life if I had a house a few suburbs out. If nuke hits Melbourne it's all over red rover, if Commbank goes tits up it's basically the same thing from a finance POV.

Re: Ask HN: How do you protect your emergency fund from inflation?

#24

Post by luciusdomitius »

2000UltraDeluxe wrote: post #6
Shatnerz wrote: post #4

You don't. Emergency funds are for emergencies. Higher yields are possible with various different investments but they all come with additional risk. You do not want to have an emergency fund they may drop in value during a period which you may need to draw on your emergency fund, such as a market downturn that leaves you unemployed. Similarly, you want to be able to access emergencies funds quickly. Emergencies are…

This. Some money on a regular savings account, and some more as cash.

Regular savings account offers interest 5-6 percent below even paper inflation. How is this advice on-topic, when OP is asking how to AVOID EXACTLY THIS??

Re: Ask HN: How do you protect your emergency fund from inflation?

#25

Post by unmole »

luciusdomitius wrote: post #24
2000UltraDeluxe wrote: post #6

Earlier quoted context omitted.

This. Some money on a regular savings account, and some more as cash.

Regular savings account offers interest 5-6 percent below even paper inflation. How is this advice on-topic, when OP is asking how to AVOID EXACTLY THIS??

The advice is perfectly on topic because OP's fundamental premise is wrong.

Re: Ask HN: How do you protect your emergency fund from inflation?

#26

Post by pawelkobojek »

My emergency fund is set for 12 months. I keep 1/4 in a savings account for a quick access and 3/4 in government retail bonds which in my country (Poland) are inflation adjusted after first year and I’m able to withdraw any time I wish so. The capital is guaranteed no matter when you withdraw and if the withdrawal happens before expiration, 2 PLN are subtracted from interest per each 100 PLN. This obviously assumes that government won’t default but it’s a safe bet in my opinion.

Re: Ask HN: How do you protect your emergency fund from inflation?

#29

Post by unmole »

luciusdomitius wrote: post #20
glutamate wrote: post #15

Earlier quoted context omitted.

Gold and BTC are not suitable for emergency funds: liquidty, low volatilty and easy access is what you are looking for.

In a highly inflationary environment, low volatility simply means you get burned. OP is asking how to avoid exactly this.

Having emergency funds in highly volatile assets simply means you get rekt in an emergency.

Re: Ask HN: How do you protect your emergency fund from inflation?

#30

Post by Adrox »

luciusdomitius wrote: post #8

Right now the two alternatives are PHYSICAL gold(massively undervalued) and BTC. ECB won't really increase interest rates as the last time they did it (11 years ago) half of Southern Eurozone almost went bankrupt. Out of the stock market - probably energy and defense stocks. Also food production and commodities. To be honest I am seriously considering a move to say South America. Even if we don't end up in a hot war,…

Yeah in South America you are much more free to get robbed or murdered. (I'm talking about Brazil, Argentina, Colombia, not sure what's your preferred country).
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