31–40 of 59 posts
Obviously these must have gotten more expensive since inflation rose. But it will protect you against higher inflation. You'll lose in case of deflation/lower inflation.
Be sure you understand the product before getting into it.
Earlier quoted context omitted.
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.
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,…
Emergency fund should be approx 6 months salary, both easily accessible AND reliable. With the amount of apps refusing to serve customers money and crypto nutjobs manipulating the market, BTC is neither.
I'm in the UK, so I have a 50/50 split between a regular bank account and premium bonds. Once I hit that 6 month salary between the two, it's a split (80/20 as I'm younger and more risk tolerant) of whatever I have leftover every month between a global index fund, and UK GILTs.
Simple, no worries, and basically everything I've seen reccomended since the 1950's.
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).
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, this, this and THIS !
Emergency funds = cash = it goes into a boring bank account.
Full stop. No arguments.
If you have to "sell" or "close" something in order to get it, it is NOT emergency funds.
If there are conditions on your access to it, e.g. "n Day Access" then it is NOT emergency funds.
Your emergency funds are sacrosanct. Put them in the most boring bank account with the most boring bank you can find, maybe with two banks just to be safe (if you live in the UK, put it with NS&I where the account is 100% guaranteed by the government, i.e. over and above the £85k guarantee that is available with normal banks).
If you have spare cash sloshing around after you have put a decent chunk aside in your emergency accounts, then you can invest / chase interest rates with that. But DO NOT mess around with your emergency funds.
Do your research on which is the best yielding. In Australia, at least when I last checked, it's LFSPA.
Stocks are not a good option obviously. Current situation is a testament of that. We can see the situation in Russia now where the stock market itself is shutdown (obviously these are exceptional circumstances) but people loose total control over their investments for unknown period of time.
That said, these troubling times are even more riskier to invest. Perhaps, the best you could do is to prepare for potential supply chain issues with gasoline, LPG, etc.
I happen to stay in Sri Lanka nowadays, where the inflation crossed 16%, and the there are many issues with lack of essentials. Supermarkets don't sell more than 5kg of sugar, me having to drive 20km because the three gas stations I drove past didn't have petrol, and soaring prices of pretty much everything.
I thought to stock up the essentials to last a couple months or so, expecting the imminent worse conditions.
In Europe, though, I don't think things to get this extreme, but my suggestion would he to stock up. Not hoarding piles of toilet paper, but make sure to have a reserve can of petrol, extra medicine, and the essentials to last a month or two. Food prices went up about 20% in just last month here, and that annualized return of 240% I'd much better than the appreciation of gold, real estate, stocks, etc.
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…
In the 70s you'd have lost 30% of your money in adjusted terms if you put your money in a tracker.