Bank for emergency fund

[Roger Van Zant]

I have an emergency fund of 1.8m yen, which is six months of living expenses for me (single, no kids, renter).
Currently this is parked in my Rakuten bank, where it earns an earth-shattering 0.1% per year in interest.
I'll try not to spend the 1800 yen all at once.

Just wondering if anyone else has found any better deals?

Since it's an emergency fund, I want the money to be easily accessible at any time, so this precludes using fixed-term deposit accounts or the like.

So, can anyone beat 0.1% in a bank account which can be accessed at any time?

[Mrblobby]

I'll be interested to hear answers to this.

My local inaka bank offers an incredible 0.001% (or something similarly magnificent).

But... I note you "fixed-term deposit accounts" comment: do these exist? (Well, ones worth bothering with). Sorry, sort of off-topic.

[Roger Van Zant]

I'll be interested to hear answers to this.

My local inaka bank offers an incredible 0.001% (or something similarly magnificent).

But... I note you "fixed-term deposit accounts" comment: do these exist? (Well, ones worth bothering with). Sorry, sort of off-topic.

They exist.
My bank, Rakuten, offers these rates:

https://ibb.co/kmN8DQm

Apart from the 6 months and 1 year terms, all the rates are 0.02%.
This makes zero sense to me, as I am already getting 0.1% from my regular, instant access bank account.
Why would someone bother with this 0.02% rate when they could just leave their money at 0.1%? I have no understanding of this.
I could opt for the 0.13% and 0.15% rates, but then my money would be tied up and no longer an emergency fund.

[Mrblobby]

Thanks, haha. I see.

I was just speaking with my sister at the weekend in the UK. She just put a seriously large amount of inheritance money in something giving over 5%. So jealous!!

[beanhead]

Thanks, haha. I see.

I was just speaking with my sister at the weekend in the UK. She just put a seriously large amount of inheritance money in something giving over 5%. So jealous!!

She just about beat inflation, which for 2023 was 4.2%, according to this site.
https://www.ons.gov.uk/economy/inflationandpriceindices
So don't be too jealous.

[Mrblobby]

I can't remember the actual number, I think it was actually closer to 6%.

But anyway, as a guaranteed return, I think I'll remain rather jealous.

Then again, I'm not sure I'd want to be living in the UK.

[Deep Blue]

Thanks, haha. I see.

I was just speaking with my sister at the weekend in the UK. She just put a seriously large amount of inheritance money in something giving over 5%. So jealous!!

She just about beat inflation, which for 2023 was 4.2%, according to this site.
https://www.ons.gov.uk/economy/inflationandpriceindices
So don't be too jealous.

Still much better than Japan where inflation is over 3%, so cash in the bank is losing purchasing power. Not to mention the even greater loss of purchasing power for anything not yen denominated.

My sterling is locked into a two year fixed 5.5% account and long duration gilts currently yielding between 4-5%

[sutebayashi]

Since it's an emergency fund, I want the money to be easily accessible at any time, so this precludes using fixed-term deposit accounts or the like.

Can’t beat cash in the bank account for ease of access, but it’s a loser in the face of inflation indeed.

How easy is “easily accessible” though?

Myself, I just have cash in the bank, but you are making me think about this.

If I have an emergency, how soon do I really need all of the cash?

I could have some cash in a forex account - not the best place for emergency money perhaps, but with higher interest rates from foreign currencies currently, it doesn’t look like a bad option to me - if one accepts the fx risk of essentially holding non-yen, and forex accounts can often provide the cash on the same day (close the position, request cash withdrawal). Also I’m assuming one would be disciplined enough to not go crazy and leverage up with the “emergency” money.

Not accessible same day or even the next, but stuffing spare money into a foreign bond fund seems like a reasonable approach - not every last yen, but if the “emergency” can wait for 3 days or whatever to sell enough yen of the fund, then this seems better than the bank too.

Last emergency I had, was needing to catch a flight in short order… even that I must have just paid via credit card though. Plenty of time to get cash into the bank account?

(I never properly studied emergency funds so apologies if I am way off base here)

[RetireJapan]

(I never properly studied emergency funds so apologies if I am way off base here)

It's a good point. There are many forms of emergency fund, beyond just having cash to hand or in a bank.

Having credit cards with high limits.
Having a high saving rate, so that you could use the excess for the emergency if you needed to.
Having family who can help.
Having air miles so you can get free flights if you need them.

The key is to make sure you would be able to survive conceivable or likely emergencies without taking permanent damage from them. Basically thinking about what you might need to suddenly pay for, and making sure you can do so.

For us, we could pay for pretty much anything on a credit card then pay it off by selling investments, so we don't technically need a cash emergency fund.

[Roger Van Zant]

Since it's an emergency fund, I want the money to be easily accessible at any time, so this precludes using fixed-term deposit accounts or the like.

Can’t beat cash in the bank account for ease of access, but it’s a loser in the face of inflation indeed.

How easy is “easily accessible” though?

Myself, I just have cash in the bank, but you are making me think about this.

If I have an emergency, how soon do I really need all of the cash?

I could have some cash in a forex account - not the best place for emergency money perhaps, but with higher interest rates from foreign currencies currently, it doesn’t look like a bad option to me - if one accepts the fx risk of essentially holding non-yen, and forex accounts can often provide the cash on the same day (close the position, request cash withdrawal). Also I’m assuming one would be disciplined enough to not go crazy and leverage up with the “emergency” money.

Not accessible same day or even the next, but stuffing spare money into a foreign bond fund seems like a reasonable approach - not every last yen, but if the “emergency” can wait for 3 days or whatever to sell enough yen of the fund, then this seems better than the bank too.

Last emergency I had, was needing to catch a flight in short order… even that I must have just paid via credit card though. Plenty of time to get cash into the bank account?

(I never properly studied emergency funds so apologies if I am way off base here)

Any decent foreign bond funds available through SBI (my broker)?
Also, what about REITs as an alternative to bond funds?