"Ignoramus5429" <ignoramus5429[at]NOSPAM.5429.invalid> wrote in message
news:xcoyg.22129$qd3.352[at]fe41.usenetserver.com...
- quote -

I think I agree with you. I already have approved lines of credit that are
equal to my one years pay. I owe nothing on them so far cause I have never
used them nor would I need them unless emergency. I would prefer cash for
emergencies of course but how much does one have to sit on given my living
circumstances?

"Douglas Johnson" <johnson[at]classtech.NOTPARTOFADDRESS.com> wrote in message
news:hjrkc2pv6pdsnburqbbsuvrau8dm0do0jr[at]4ax.com...
- quote -

Yes I was thinking along the lines of 3 to 5 times of normal fund savings.
I save 3 months take home pay at all times. I would still have my large
purchases kept in cash however. I'm still undecided.
- quote -

So do I and that was my point. I am debt free with ready access to lines of
credit. It is a secured line of credit so in worst case it's set up to only
bill for interest, not interest and principal. And Again I would still
have my large purchases fund for dire emergency.

But I'm still undecided. Perhaps better to try and save 12 months take home
pay and invest 8 months of that in the markets maybe? I'm not house
shopping so It's not like I have a very big ticket purchase coming up. What
do people do with all their savings when they have no bills to pay?


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<woessner[at]gmail.com> wrote in message
news:1154094446.475397.176060[at]i3g2000cwc.googlegroups.com...
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I'm not American.

CDIC insured institutions pay big premiums I figure and pass the costs on to
us to insure the money in the form of lower rates perhaps? I am debating
tax exempt funds as I have unused tax exempt payments I can make from the
past 6 years.


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Ignoramus5429 wrote:
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The same would (or should) be true of a conventional emergency fund.

John Cowart

joetaxpayer wrote:
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I have a ladder of three 3-month T-bills; one rolls over every month,
and I siphon the some interest off for beer and beef jerky etc. money
;-) I have more than enough signature credit available (credit cards)
to float for a month while I wait for the next T-bill to mature. I also
buy a 6-month $1000 T-bill whenever I have a spare $1000 (that's where a
lot of the accumulated interest goes.)

I'm sure I could get a little better rate, but this works for me, and
it's simple.

Best regards,
Bob

bo peep wrote:
- quote -

For me it was.
When I last refinanced in April 04, to a 5.25% 15 year mortgage,
interest rates were low and I looked at my 'emergency money', the
classic 6 month's income, and I decided to emerge with little cash, but
a much lower mortgage payment, the result of the lower rate and lower
principal. Along with that I included an HELOC. The warning, of course,
is the HELOC is tied to the prime rate and would now cost far more than
two years ago, but I do believe the answer to your question is a
qualified 'yes'.
There are those for whom the 6 month emergency fund simply isn't needed.
The well off person with a diversified portfolio who can just sell a bit
if they need quick cash, for instance.
JOE

One Man Rodeo wrote:

- quote -

I think that you will do OK if you have some in a money market. If long
term interest rates were high, than a ladder would be appropriate to
maintain cash flow.

I think that you need more diversification in the stock market besides
mid-caps and large-caps. Some sector funds are a good hedge against
general price movements.

Look at some high dividend situations to supply some cash flow.

--
Ron

"bo peep" <cowartmisc1[at]yahoo.com> writes:

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It's not a great one. As far as I know, every HELOC includes
provisions that the bank may check your credit periodically
and unilaterally close down your ability to borrow more. They
won't necessarily demand (or even be able to demand) that you
pay them off immediately, but they can at any time stop you
from borrowing more.

Which means that just when you need the money the most - some
crisis - it may not be available.

A similar thing would be for your brokerage account to
allow you to borrow on margin - your assets act as collateral
and if you need to you could borrow against, say, your stocks
or mutual funds - typically up to half of their value - without
having to liquidate the positions. A brokerage might not be
checking your credit all the time since, unlike a bank or
HELOC, if they want to, they can liquidate your positions
to get their money back relatively trivially. It's a lot
harder for a bank to sell your house out from under you,
so they have to be a bit more vigilant with respect to your
credit.

--
Plain Bread alone for e-mail, thanks. The rest gets trashed.
No HTML in E-Mail! -- http://www.expita.com/nomime.html
Are you posting responses that are easy for others to follow?
http://www.greenend.org.uk/rjk/2000/06/14/quoting

"One Man Rodeo" <do_not_spam_me[at]I_am_poor.net.easynews.com> wrote:

- quote -

This makes sense as long as the investment account is about 5 times larger
than your likely emergency needs. Then you can use a margin account to get
quick cash. However, if your cash needs are too large, you will risk having to
sell the funds or ETF's at a bad time.

- quote -

Because the insurance companies have large assets relative to their likely short
term pay outs. They also have ready lines of credit available.

-- Doug

On Fri, 28 Jul 2006 14:05:04 -0500, bo peep <cowartmisc1[at]yahoo.com> wrote:
- quote -

It would depend on the terms and fees involves (such as "usage fees"
or minimum balance etc). I would think that it would never be an
alternative to saving money, in some form, but possibly could be
useful when savings are in less liquid form. Drawing down that line
means paying it back eventually, so money for that have to be found
somewhere. I try to avoid such stuff like the plague.

i

Ignoramus5429 wrote:
- quote -

Would a pre-approved HELOC be an acceptable alternative to an emergency
fund?

John Cowart

One Man Rodeo wrote:
- quote -

I would steer clear of investing your emergency fund in stocks. The
reason is simple: In short order (~2 years), your emergency fund could
become half an emergency fund. So not only might you be forced to sell
at a loss, you might not even have enough money to cover your
emergency. Talk about a double whammy! (If you think I'm exagerating
about losing half your money, just look at what happened to VFINX
between 9/1/00 and 10/9/02.)

Instead, I would stick with the traditional vehicles. There are some
pretty high-interest savings accounts available. I often see Emigrant
Direct mentioned on Ben's Bargains as one of the highest rate,
FDIC-insured accounts available. If you choose the money market route,
I can recommend VMMXX. There are also tax-exempt money market funds to
choose from. The tax-exempt funds only make sense if you're in a
higher tax bracket (usually > = 28%).

--Bill

It makes no sense to say that "you keep your emergency cash in
stocks". If it is in stocks, it is not cash.

I see no problem with not having much money in stocks if you have a
lot of money, little emergency needs, and think that stocks are much
better investment than cash at the moment. Yeah, you run some risk
that stocks could be lower when you need to sell them in emergency,
but risks are everywhere anyway and there is a chance that stocks
would be higher when an "emergency" occurs.

The point is that with savings, in some liquid form like stocks or
money market investments, emergencies become easier to manage. Having
money stashed is better than not having money, and the exact form of
liquid investments is secondary.

Also, do not rely on being able to access credit in emergencies, if
you are in a dire need of money, most creditors would be reluctant to
give it to you. (e.g lose a job and get sick, or some such)


i

I keep two separate accounts for emergency cash.

One account is for future large ticket purchase goals IE I pay my auto
insurance once a year so I contribute in advance, I will probably buy a new
car next year so I've contributed car payments in advance, perhaps new
computers or computer equipment will be in the future. I keep these funds
in a high interest savings account that has cheque writing abilities.

I keep a second account also currently in a high interest account with a
different bank. This fund I keep solely for the possibility of losing
paycheques or medical costs etc. Short term needs or emergency funds as
opposed to future buying funds as I do with my first account. I try to keep
three or more months of pay in this fund. Once this fund reaches 3 months
pay worth I invest in short term Guaranteed interest deposits or move money
into the big ticket purchases fund.

At my age (I'm 30) and my marital status (I'm single no kids) and equity (I
rent and won't be buying a home anytime soon) I'm thinking I can keep my
emergency fund with a broker and invest these emergency funds in Mutual
funds and ETF's.

It will still offer me lots of liquidity although not as fast as a bank
account and the possibility of higher returns. this is afterall in my mind
an insurance fund. If insurance companies invest their payout holdings why
not me? Funds and ETF's are not as volatile as stocks and esp. with ETF
management fees are very very low some as low as .15% capped. I would
consider only funds and ETF's that invest in mid-caps and large-caps because
I would like the dividends reinvested with some potential growth.

Is this short sighted to keep emergency funds in this way? For dire
emergencies I have a large pool of credit to draw from and can pay off debts
from my brokerage equity.

What are people's thoughts on this approach?