Where are we keeping our emergency funds?
Discussion
With interest rates waning, what can I do with my emergency fund to maximise returns? It's currently getting 4.1% in an easy access ISA.
I am wondering whether I should put it in a fixed ISA- there will be a penalty to withdraw before the term but the idea is that I basically won't need to unless I lose my job. At least I will guarantee that the returns on my cash won't go down for X years.
What if I lumped it into my stocks & shares ISA (currently 100% global equities ETFs) and maybe incorporated a bonds component to reduce risk on the whole pot?
I currently have my emergency fund and an approximately equal amount in stocks and shares and while I will continue to grow the S&S I basically look at that 50% in cash and think I'm being excessively risk averse.
Maybe I just need to re-assess the cash proportion, I am continuously employed so would get notice and redundancy pay if I was let go (which does not look likely near-to-medium term). Currently my accessible cash emergency fund equates to six months normal expenditure.
I am wondering whether I should put it in a fixed ISA- there will be a penalty to withdraw before the term but the idea is that I basically won't need to unless I lose my job. At least I will guarantee that the returns on my cash won't go down for X years.
What if I lumped it into my stocks & shares ISA (currently 100% global equities ETFs) and maybe incorporated a bonds component to reduce risk on the whole pot?
I currently have my emergency fund and an approximately equal amount in stocks and shares and while I will continue to grow the S&S I basically look at that 50% in cash and think I'm being excessively risk averse.
Maybe I just need to re-assess the cash proportion, I am continuously employed so would get notice and redundancy pay if I was let go (which does not look likely near-to-medium term). Currently my accessible cash emergency fund equates to six months normal expenditure.
Hustle_ said:
With interest rates waning, what can I do with my emergency fund to maximise returns? It's currently getting 4.1% in an easy access ISA.
I am wondering whether I should put it in a fixed ISA- there will be a penalty to withdraw before the term but the idea is that I basically won't need to unless I lose my job. At least I will guarantee that the returns on my cash won't go down for X years.
What if I lumped it into my stocks & shares ISA (currently 100% global equities ETFs) and maybe incorporated a bonds component to reduce risk on the whole pot?
I currently have my emergency fund and an approximately equal amount in stocks and shares and while I will continue to grow the S&S I basically look at that 50% in cash and think I'm being excessively risk averse.
Maybe I just need to re-assess the cash proportion, I am continuously employed so would get notice and redundancy pay if I was let go (which does not look likely near-to-medium term). Currently my accessible cash emergency fund equates to six months normal expenditure.
I have mine in a S&S ISA, and put a proportion of it into an MMF. On the MMF component, I think I'm getting ~4.35% after fees which works for me. I am wondering whether I should put it in a fixed ISA- there will be a penalty to withdraw before the term but the idea is that I basically won't need to unless I lose my job. At least I will guarantee that the returns on my cash won't go down for X years.
What if I lumped it into my stocks & shares ISA (currently 100% global equities ETFs) and maybe incorporated a bonds component to reduce risk on the whole pot?
I currently have my emergency fund and an approximately equal amount in stocks and shares and while I will continue to grow the S&S I basically look at that 50% in cash and think I'm being excessively risk averse.
Maybe I just need to re-assess the cash proportion, I am continuously employed so would get notice and redundancy pay if I was let go (which does not look likely near-to-medium term). Currently my accessible cash emergency fund equates to six months normal expenditure.
Everyone's circumstances and more important liabilities are different , but the whole general principle of n emergency/ contingency fund is a good idea.
A 6 month cash fund is from my opinion is not a particularly risk averse level...I'd say about right for someone in stable employment with house and family to support. I will say that when I WAS working I kept about that , which would with belt tightening could have held a year . Straight cash deposits
Oddly now that I don't work ( early retirement taken in my 50s ) I keep a bigger "cash" fund. I also keep some of this in money markets and simple deposit accounts , because I want to ( and am ) maximise the use of my ISA allowances each year for my equities.
The larger contingency fund is because not just living off savings ( not taking pensions yet) when some mad world leader or idiot communist in government opens their mouth and tanks the market I want a LONG hold and do nothing ;so that I never have to cash out investments at an inopportune cycle of what can be a very volatile ride.
Put any of emergency fund in equities or bonds ? Not for me ! Paying a bit of tax on interest is peanuts compared to even the daily swings on my ISA and GIA so I don't let the tail wag the dog .
BOE just reduced interest rate to 4%
A 6 month cash fund is from my opinion is not a particularly risk averse level...I'd say about right for someone in stable employment with house and family to support. I will say that when I WAS working I kept about that , which would with belt tightening could have held a year . Straight cash deposits
Oddly now that I don't work ( early retirement taken in my 50s ) I keep a bigger "cash" fund. I also keep some of this in money markets and simple deposit accounts , because I want to ( and am ) maximise the use of my ISA allowances each year for my equities.
The larger contingency fund is because not just living off savings ( not taking pensions yet) when some mad world leader or idiot communist in government opens their mouth and tanks the market I want a LONG hold and do nothing ;so that I never have to cash out investments at an inopportune cycle of what can be a very volatile ride.
Put any of emergency fund in equities or bonds ? Not for me ! Paying a bit of tax on interest is peanuts compared to even the daily swings on my ISA and GIA so I don't let the tail wag the dog .
BOE just reduced interest rate to 4%
Edited by PM3 on Thursday 7th August 12:42
king hate the drag in the UK, everything is designed to rob you. asfault said:
With modern share trading you can sell shares and get the funds within a day. short of that emergency cash for me now is a couple of £1000. But then i dont have a wife or kids to support.
Wouldn’t have been great to have to sell down for a new boiler during trumps tariff turmoil… that’s the main issue vs access. ISAs are maxed so its either Moneymarket funds or Premium Bonds realistically.
I'm currently using Royal London's short term Moneymarkey Y inc (there is an ACC version) which purports to be paying 4.78%.
If you just want it in cash then there are platforms like Flagstone that can help though I've never used one.
I'm currently using Royal London's short term Moneymarkey Y inc (there is an ACC version) which purports to be paying 4.78%.
If you just want it in cash then there are platforms like Flagstone that can help though I've never used one.
okgo said:
Wouldn’t have been great to have to sell down for a new boiler during trumps tariff turmoil… that’s the main issue vs access.
Balance transfer 0% on credit card for a £5k boiler would be just a 3% charge to borrow that money if really needs be.Keeping funds tied up till the markets settle again.
That would be my postion. (eveyone is different though)
MattS5 said:
Balance transfer 0% on credit card for a £5k boiler would be just a 3% charge to borrow that money if really needs be.
Keeping funds tied up till the markets settle again.
That would be my postion. (eveyone is different though)
Didn’t know those dodgy cards were still around to be honest! You mean money transfer too, balance transfer is different. Keeping funds tied up till the markets settle again.
That would be my postion. (eveyone is different though)
It was just one example, I also doubt one of those cards is going to lend enough to keep you afloat for 6 months.
Some offer a halfway house between fixed and instant access cash accounts ie limited access which might tick the box.
Nationwide and Skipton BS for instance offer a few accounts ( or they did ) with between 3 - 5 withdrawals ( of any amount ) without rate penalisation.
Or as stated PB’s are fairly easy to cash in and can also be done in part.
Nationwide and Skipton BS for instance offer a few accounts ( or they did ) with between 3 - 5 withdrawals ( of any amount ) without rate penalisation.
Or as stated PB’s are fairly easy to cash in and can also be done in part.
okgo said:
Didn’t know those dodgy cards were still around to be honest! You mean money transfer too, balance transfer is different.
It was just one example, I also doubt one of those cards is going to lend enough to keep you afloat for 6 months.
You were talking about an example of a bolier. That was my reply to it.It was just one example, I also doubt one of those cards is going to lend enough to keep you afloat for 6 months.
Have yet to do this, as trying to take advantage of the markets at the moment, but the plan later this year is to use one of the Bond offerings from Microstrategy/Strategy; haven't decided which yet (and that'll also depend which are avail thru my SIPP/ISA platforms)....
poss STRK - which pays out $8per year and which is convertible into main stock at 10:1 or STRC which i believe pays out 9% and which is designed to trade between $95/100.
so aiming to use such a product as a kind of money market/emergency stash and still get yield......but with ability to sell immediately.
poss STRK - which pays out $8per year and which is convertible into main stock at 10:1 or STRC which i believe pays out 9% and which is designed to trade between $95/100.
so aiming to use such a product as a kind of money market/emergency stash and still get yield......but with ability to sell immediately.
greengreenwood7 said:
Have yet to do this, as trying to take advantage of the markets at the moment, but the plan later this year is to use one of the Bond offerings from Microstrategy/Strategy; haven't decided which yet (and that'll also depend which are avail thru my SIPP/ISA platforms)....
poss STRK - which pays out $8per year and which is convertible into main stock at 10:1 or STRC which i believe pays out 9% and which is designed to trade between $95/100.
so aiming to use such a product as a kind of money market/emergency stash and still get yield......but with ability to sell immediately.
I know you've properly drunk the Kool Aid on MicroStrategy/Bitcoin etc so it's no doubt wasted on you, but for the benefit of anyone else considering it: the things mentioned here are not at all comparable to money market/cash reserve instruments, or suitable as an emergency fund.poss STRK - which pays out $8per year and which is convertible into main stock at 10:1 or STRC which i believe pays out 9% and which is designed to trade between $95/100.
so aiming to use such a product as a kind of money market/emergency stash and still get yield......but with ability to sell immediately.
IMO there are significant risks of recession in both USA and UK. If and when markets drop it can be hard and fast. For this reason I'm hanging onto my remaining Bonds and, unusually, am also holding some Cash Funds - in the ISA.
I'd normally be saying "use your ISA for S&S and hold cash elsewhere", but I'm jumpy at the moment. So long as cash remains in the ISA wrapper it can always be put back into the stock market if my confidence improves.
I don't buy Premium Bonds. I'd rather just accept the payment of tax than get fleeced by a shocking rate of return.
Mind you, BoE having reduced rates by 0.25% I note that banks are already adjusting their rates for savers "down by more than 0.25%".
I'd normally be saying "use your ISA for S&S and hold cash elsewhere", but I'm jumpy at the moment. So long as cash remains in the ISA wrapper it can always be put back into the stock market if my confidence improves.
I don't buy Premium Bonds. I'd rather just accept the payment of tax than get fleeced by a shocking rate of return.
Mind you, BoE having reduced rates by 0.25% I note that banks are already adjusting their rates for savers "down by more than 0.25%".
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