I realize that they are unpopular these days, (I only have a 4% allocation currently), but BONDS do play a role here as well.
Someone could make a case for lower cash holding, and an increased bond position in their portfolio. Government bonds and AAA bonds tend to move inverse to stocks and tend not to drop in most crashes.
Of course, current yields are ...not great. My eMAXIS Slim 先進国債券インデックス is up +3.37 % from 15 months ago.
You can buy treasuries directly from Rakuten/Monex and SBI too, in USD.
Emergency Fund - Invest?
Re: Emergency Fund - Invest?
Bonds are an investment, though, so that goes under the "invest" camp in my book.
Re: Emergency Fund - Invest?
If you need to sell funds in an emergency, selling taxable investmets, and leaving your tax protected funds alone would be a better choice.
For the second statement, I don't think your tone is very helpful. This is clearly judgement call that depends on the person (hence this thread!).
But I think you missed my point. How do you mentally distinguish from an investment you consider part of an emergency fund, and any other investment? If your emergency fund is 1M yen, with 500k cash, and 500k in a NISA, what's the difference between that emergency 500k and the rest of the NISA?
Re: Emergency Fund - Invest?
Yes of course. This is only one of many solutions. This one works well for my situation. I’m running under the assumption that people on this forum are intelligent enough to not need a disclaimer.adamu wrote: ↑Fri Aug 27, 2021 8:30 amIf you need to sell funds in an emergency, selling taxable investmets, and leaving your tax protected funds alone would be a better choice.
For the second statement, I don't think your tone is very helpful. This is clearly judgement call that depends on the person (hence this thread!).
But I think you missed my point. How do you mentally distinguish from an investment you consider part of an emergency fund, and any other investment? If your emergency fund is 1M yen, with 500k cash, and 500k in a NISA, what's the difference between that emergency 500k and the rest of the NISA?
Not quite sure what you mean by, “ what's the difference between that emergency 500k and the rest of the NISA?”
We have one NISA account that’s only for emergency funds and any gains beyond expected inflation are viewed as gravy- if that’s what you mean by mentally distinguishing them?
Also any “tone” you may see is imaginary. I’m just here to help and be helped.
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Re: Emergency Fund - Invest?
Perhaps the disagreement comes from the nomenclature. Putting things in mental baskets is arbitrary.
It might be easier to say < (Zero Risk Allotment) -> (High-Risk Allotment).
Cash in hand -> Cash in the bank -> Short term bonds (Gov/AAA) -> Long term bonds (Gov/AAA) -> Stocks/Commercial paper ->Commodities -> Options and derivities
I think a mix of the first 4 categories is fine for an Emergency fund, personally. I heavily favor the 2nd, but am very thankful for the reminder not to forget to have cash in hand!
(In a fever dream I thought about having some 1gram gold bars to barter in an apocalyptic emergency, maybe if Gold drops I`ll make this silly dream a reality. )
It might be easier to say < (Zero Risk Allotment) -> (High-Risk Allotment).
Cash in hand -> Cash in the bank -> Short term bonds (Gov/AAA) -> Long term bonds (Gov/AAA) -> Stocks/Commercial paper ->Commodities -> Options and derivities
I think a mix of the first 4 categories is fine for an Emergency fund, personally. I heavily favor the 2nd, but am very thankful for the reminder not to forget to have cash in hand!
(In a fever dream I thought about having some 1gram gold bars to barter in an apocalyptic emergency, maybe if Gold drops I`ll make this silly dream a reality. )
Re: Emergency Fund - Invest?
I'm trying to understand the reasoning behind considering a portion of your investments as half of your emergency fund. Usually an emergency fund is there to cover you so you don't have to sell investments. But if your investments are your emergency fund, what makes it an emergency fund, as opposed to just... investments?Gulliver wrote: ↑Fri Aug 27, 2021 9:03 am Not quite sure what you mean by, “ what's the difference between that emergency 500k and the rest of the NISA?”
We have one NISA account that’s only for emergency funds and any gains beyond expected inflation are viewed as gravy- if that’s what you mean by mentally distinguishing them?
For example:
Let's say again you have a 500k cash / 500k NISA emergency fund.
You've also maxed out the NISA the last few years, so there's a few million in there, and you have taxable accounts too.
An emergency happens during a 50% market downturn, so your investments are currently at a loss.
1) Do you consider the investment half reduced to 250k?
2) What happens if you need to buy some plane tickets for, say 600k?
3) What if the price was 1.1million?
4) How is this different from saying that your emergency fund is 500k cash, and if it's not enough, you'll break into your investments?
Understood. It's easy to misunderstand brevity and your two inequalities left a lot open to interpretation.