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Posted: 2/22/2021 8:11:38 AM EST
I know we're all concerned with inflation.
My wife and I have a sizeable emergency fund (3 months of total expenses) set aside in a savings account.
It's currently in a Money Market account earning about 1.2%, which of course is less than the current inflation rates.

I'd like to find a way to have it hedge against inflation, but need to have it liquid so we can access if we need to.

Anybody dealing with something similar?
Link Posted: 2/22/2021 8:12:55 AM EST
I am also interested in this.
Link Posted: 2/22/2021 8:14:22 AM EST
[Last Edit: 2/22/2021 8:16:18 AM EST by SpudCrushr]
Risk tolerance? Stock market is fairly liquid (couple business days to sell and move the money). You could put it in a fund or blue chip stocks. Fairly safe, modest returns. Semi-protected against inflation.

The problem is risk is rewarded. If there was a risk-free way to get 6% on your money, everyone would do it. The higher the return, the more risk you must take on, generally.
Link Posted: 2/22/2021 8:17:08 AM EST
[Last Edit: 2/22/2021 8:20:25 AM EST by JamiesGotAGun]
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By SpudCrushr:
Risk tolerance? Stock market is fairly liquid (couple business days to sell and move the money). You could put it in a fund or blue chip stocks. Fairly safe, modest returns.
View Quote
@SpudCrushr

Tax implications?  I have a couple of brokerage accounts, and thought of putting it in an ETF, but was concerned with tax issues.
ETA: I'm OK risking the money in an investment.
Link Posted: 2/22/2021 8:20:24 AM EST
You can buy Bitcoin and sell it the same day. Is that liquid enough. Ride it to $100k and then sell.
Link Posted: 2/22/2021 8:20:58 AM EST
Probably the safest thing would be preferred stock. Something like OXLCP will give you a steady dividend monthly and will fluctuate very little in price.
Link Posted: 2/22/2021 8:22:39 AM EST
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By JamiesGotAGun:
@SpudCrushr

Tax implications?  I have a couple of brokerage accounts, and thought of putting it in an ETF, but was concerned with tax issues.
ETA: I'm OK risking the money in an investment.
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Discussion ForumsJump to Quoted PostQuote History
Originally Posted By JamiesGotAGun:
Originally Posted By SpudCrushr:
Risk tolerance? Stock market is fairly liquid (couple business days to sell and move the money). You could put it in a fund or blue chip stocks. Fairly safe, modest returns.
@SpudCrushr

Tax implications?  I have a couple of brokerage accounts, and thought of putting it in an ETF, but was concerned with tax issues.
ETA: I'm OK risking the money in an investment.


Not a tax guy but it depends on how long you hold it. Over a year is much cheaper than selling under a year. However, you're taxed on the gains, so it's probably still a better deal than getting 1% in a savings account.

Link Posted: 2/22/2021 8:24:44 AM EST
Crypto
Link Posted: 2/22/2021 8:24:56 AM EST
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By glocknick:
You can buy Bitcoin and sell it the same day. Is that liquid enough. Ride it to $100k and then sell.
View Quote


best advice in this thread, great opportunity to buy today too
Link Posted: 2/22/2021 8:25:37 AM EST
In.
Got in the low six figures sitting in savings untouched.
May of made $150 in interest this year.
Link Posted: 2/22/2021 8:26:38 AM EST
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By SpudCrushr:
Risk tolerance? Stock market is fairly liquid (couple business days to sell and move the money). You could put it in a fund or blue chip stocks. Fairly safe, modest returns. Semi-protected against inflation.

The problem is risk is rewarded. If there was a risk-free way to get 6% on your money, everyone would do it. The higher the return, the more risk you must take on, generally.
View Quote


This. The stock market is fairly liquid. Selling an asset and moving the proceeds into a savings/checking account electronically is usually a 3 business day or less process. I keep my emergency fund in a stock market account and all of your "cash" is held in a money market account similar to a bank account. You can let it sit there forever protected like a bank account, or buy investments with it. But, just a cash balance sitting in a brokerage account is going to earn less than the 1.2% you found.

So, it all comes down to the risk-to-reward. Unfortunately, you are going to have to take on some level of risk to beat out inflation and the current small percentage of interest you are getting from your bank. I personally like stable dividend stocks. I love that quarterly payment and just reinvest the proceeds into more shares (DRIP) But, you'll have to research and come up with your own strategy. Either way, I would look into signing up for a brokerage account. A lot of them have commission-free trades. The one I use currently (etrade.com) currently has free basic trades.
Link Posted: 2/22/2021 8:27:29 AM EST
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By Bale2011:
Crypto
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Only if you like roller coaster rides
Link Posted: 2/22/2021 8:27:48 AM EST
ally account
Link Posted: 2/22/2021 8:28:12 AM EST
Uhhhh.... where are you getting 1.2% on a savings account.  That's pretty high right now.
Link Posted: 2/22/2021 8:29:39 AM EST
[Last Edit: 2/22/2021 8:55:38 AM EST by rollin-tumblin]
stock market.  Don't get swayed into chasing after the "next big thing, get in now before it SOARS 8700%!" stocks.  Don't get me wrong, plenty do appreciate very rapidly, but just as many crash and burn.  Put it into stable dividend kings.  Create your own account at any of the popular brokerages with decent apps.  You can typically have access to your $$ within 3-4 days if it becomes necessary to liquidate
Link Posted: 2/22/2021 8:31:02 AM EST
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By SpudCrushr:


Not a tax guy but it depends on how long you hold it. Over a year is much cheaper than selling under a year. However, you're taxed on the gains, so it's probably still a better deal than getting 1% in a savings account.

View Quote
Agreed.  Thanks much!
Link Posted: 2/22/2021 8:31:18 AM EST
Originally Posted By JamiesGotAGun:
I know we're all concerned with inflation.
My wife and I have a sizeable emergency fund (3 months of total expenses) set aside in a savings account.
It's currently in a Money Market account earning about 1.2%, which of course is less than the current inflation rates.

I'd like to find a way to have it hedge against inflation, but need to have it liquid so we can access if we need to.

Anybody dealing with something similar?
View Quote

What bank is paying 1.2%? That’s twice the national average from what I can see on the Internet.
Link Posted: 2/22/2021 8:31:41 AM EST
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By big_aug:
Uhhhh.... where are you getting 1.2% on a savings account.  That's pretty high right now.
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This?
Link Posted: 2/22/2021 8:32:50 AM EST
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By FALARAK:


This?
View Quote


In before OP opened the account years ago at 1.2% and doesn't realize it's 0.4% now.
Link Posted: 2/22/2021 8:34:40 AM EST
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By rollin-tumblin:
stock market.  Don't get swayed into chasing after the "next big thing, get in now before it SOARS 8700%!" stocks.  Don't get me wrong, plenty do appreciate very rapidly, but just as many crash and burn.  Put it into stable dividend kings
View Quote
Yeah that's what I'm thinking.  S&P 500 index fund likely.

Link Posted: 2/22/2021 8:35:52 AM EST
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By Ty_Webb:

What bank is paying 1.2%? That's twice the national average from what I can see on the Internet.
View Quote
I just checked online and it appears they have lowered their rates from when I first opened my Money Market account with them.
Currently 1%, but back when I opened it, it was higher.
Gotta do something with it.  It's just sitting there, losing value.

Link Posted: 2/22/2021 8:37:59 AM EST
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By JamiesGotAGun:
I just checked online and it appears they have lowered their rates from when I first opened my Money Market account with them.
Currently 1%, but back when I opened it, it was higher.
Gotta do something with it.  It's just sitting there, losing value.

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Originally Posted By JamiesGotAGun:
Originally Posted By Ty_Webb:

What bank is paying 1.2%? That's twice the national average from what I can see on the Internet.
I just checked online and it appears they have lowered their rates from when I first opened my Money Market account with them.
Currently 1%, but back when I opened it, it was higher.
Gotta do something with it.  It's just sitting there, losing value.



who is "them" ?
Link Posted: 2/22/2021 8:41:55 AM EST
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By FALARAK:


who is "them" ?
View Quote
Affinity Plus
Link Posted: 2/22/2021 8:44:41 AM EST
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By big_aug:


In before OP opened the account years ago at 1.2% and doesn't realize it's 0.4% now.
View Quote

That’s what my Barclays Savings is Down to. It was at 2.20 just a couple years ago and has been steadily decreasing.
Was .90 when I opened it like 7-8 years ago.
Link Posted: 2/22/2021 8:44:45 AM EST
[Last Edit: 2/22/2021 8:46:20 AM EST by Soybomb]
Three months of expenses is a small emergency fund (in that you might need 6 months+) and a “high” yield savings account is the right place for it.  The cost of losing a bit to inflation is the price you pay for the safety net.  A common scenario for needing your emergency money would be the economy tanking and your job following soon behind it.  If you’re invested in the stock market your emergency fund of 3 months might only be 2 months when you remove it.
Link Posted: 2/22/2021 8:48:20 AM EST
Blockfi account. Put it in a usd stable coin but earn like 8.6% on it. Interest accumulates monthly into the crypto of your choice: btc eth link (i think)

Link Posted: 2/22/2021 8:50:42 AM EST
Following.   Right now I have it broken up into several limited high interest savings accounts, but there has to be a better way.
Link Posted: 2/22/2021 8:58:08 AM EST
1% is pretty good for a money market acct.  Bottom line - this is it for that type of account.  If your goal is more yield, then the only way to do that is to move up the risk ladder.  Next would be government paper, T bills, etc.  There is a fund named GBIL that is the closest I've found to a cash equivalent.  All short term government paper,   Next would be corporate bonds, baby bonds that pay 4-8% or so. Preferred stock would be next in line.   Unless you have access to fully liquid cash value life insurance, this is where it's at.
Link Posted: 2/22/2021 9:05:19 AM EST
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By Soybomb:
Three months of expenses is a small emergency fund (in that you might need 6 months+) and a “high” yield savings account is the right place for it.  The cost of losing a bit to inflation is the price you pay for the safety net.  A common scenario for needing your emergency money would be the economy tanking and your job following soon behind it.  If you’re invested in the stock market your emergency fund of 3 months might only be 2 months when you remove it.
View Quote


This.
Link Posted: 2/22/2021 9:14:19 AM EST
“For balances up to $25,000”.


I’m currently with Viobank and American Express FSB at .5%.
Link Posted: 2/22/2021 9:25:58 AM EST
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By HKPDW:
“For balances up to $25,000”.


I’m currently with Viobank and American Express FSB at .5%.
View Quote


T-Mobile is 4% for the first 3,000 and 1% for everything after.    AMEX was good for awhile, but has steadily declined.   I have mine spread between multiple accounts like T-Mobile to maximize the interest even if it's only for 3k at a time.
Link Posted: 2/22/2021 9:30:44 AM EST
You should keep your emergency fund in the savings account. It might not keep up if inflation gets bad, but that's tomorrow's problem. You don't want your emergency fund in crypto or the stock market, and have your roof fall off the day all the markets are down.

Investing and hedging inflation should be left to other accounts. Emergency funds need to stay constant.
Link Posted: 2/22/2021 9:31:17 AM EST
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By JamiesGotAGun:
@SpudCrushr

Tax implications?  I have a couple of brokerage accounts, and thought of putting it in an ETF, but was concerned with tax issues.
ETA: I'm OK risking the money in an investment.
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Originally Posted By JamiesGotAGun:
Originally Posted By SpudCrushr:
Risk tolerance? Stock market is fairly liquid (couple business days to sell and move the money). You could put it in a fund or blue chip stocks. Fairly safe, modest returns.
@SpudCrushr

Tax implications?  I have a couple of brokerage accounts, and thought of putting it in an ETF, but was concerned with tax issues.
ETA: I'm OK risking the money in an investment.


Tax is a moot point. You're paying taxes on interest too.
Link Posted: 2/22/2021 9:39:01 AM EST
Link Posted: 2/22/2021 9:39:17 AM EST
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By apexcrusade:
1% is pretty good for a money market acct.  Bottom line - this is it for that type of account.  If your goal is more yield, then the only way to do that is to move up the risk ladder.  Next would be government paper, T bills, etc.  There is a fund named GBIL that is the closest I've found to a cash equivalent.  All short term government paper,   Next would be corporate bonds, baby bonds that pay 4-8% or so. Preferred stock would be next in line.   Unless you have access to fully liquid cash value life insurance, this is where it's at.
View Quote
Yep.

I'd say have 3-6 months to cover bills and essentials in your savings then anything extra I'd ramp up into some investments like an vanguard index fund(s) and/or dividend aristocrat stocks. If inflation starts ramping interest rates back up then bonds will start to look a lot better again too.

It's never a bad idea to keep some hard cash at the house too. $500-$5,000 on hand in case you can't get to a bank/atm because of power outage or something and you need to evacuate to another area.
Link Posted: 2/22/2021 9:42:11 AM EST
Unless someone has a better money market fund or high yield savings recommendation, you are already doing the right thing OP.

People recommending you invest your EMERGENCY FUND in stocks or crypto are either high or illiterate.
Link Posted: 2/22/2021 9:46:30 AM EST
How much equity do you have in your house?
Link Posted: 2/22/2021 9:48:02 AM EST
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By big_aug:
Uhhhh.... where are you getting 1.2% on a savings account.  That's pretty high right now.
View Quote



Good question .


And what is your tolerance for risk ??   And time line .   And how much sleep can you do without  ?

Can't hurt to wait in the current times .



gd
Link Posted: 2/22/2021 9:50:35 AM EST
Emergency Fund
Your grandparents might have called it a "rainy day fund", but this emergency fund should contain enough money to cover 3-6 months of expenses.  The money should be kept liquid, which means in a checking or savings account, allowing for quick access to cover unexpected costs, such as car repairs, job loss, or medical expenses.  Your emergency fund will likely end up being tens of thousands of dollars, so it's important to resist the urge to invest it in stocks or other high interest earning accounts.  The problem with stock investments is, they are not liquid and may require weeks or even months to sell your shares to convert to cash.  There is also risk that market fluctuations may wipe out a large portion of the value of your investment when you need it the most.  The purpose of an emergency fund is to cover large expenses without having to go into debt.  While emergency funds don’t earn you interest, they do keep you from paying it.
Link Posted: 2/22/2021 9:57:41 AM EST
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Originally Posted By woodsie:
Unless someone has a better money market fund or high yield savings recommendation, you are already doing the right thing OP.

People recommending you invest your EMERGENCY FUND in stocks or crypto are either high or illiterate.
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^^^^^^^^^^^^^

We have a winner

The people who consider the equity market as a place to park emergency funds are foolish.
Link Posted: 2/22/2021 9:59:29 AM EST
What is the difference between money and currency?

How you save determines if you have any savings.

Remember brrrrrrrrrrrr!?
Link Posted: 2/22/2021 9:59:30 AM EST
If it's invested, it's not an emergency fund.  The market often dips in those instances people have emergencies.

If you're comfortable with 3 months cash on hand, then save up another 3 months worth to invest with a brokerage in a "safe" index fund or ETF as a hedge on inflation.  Stay in longer than one year and you'll pay the lesser capital gains tax if you do take profits.
Link Posted: 2/22/2021 10:01:21 AM EST
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Originally Posted By xciapup:

^^^^^^^^^^^^^

We have a winner

The people who consider the equity market as a place to park emergency funds are foolish.
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Originally Posted By xciapup:
Originally Posted By woodsie:
Unless someone has a better money market fund or high yield savings recommendation, you are already doing the right thing OP.

People recommending you invest your EMERGENCY FUND in stocks or crypto are either high or illiterate.

^^^^^^^^^^^^^

We have a winner

The people who consider the equity market as a place to park emergency funds are foolish.


But the OP themselves qualified their question with this:  ETA: I'm OK risking the money in an investment.
Link Posted: 2/22/2021 10:08:31 AM EST
[Last Edit: 2/22/2021 10:14:26 AM EST by 4v50]
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By Ty_Webb:

What bank is paying 1.2%? That’s twice the national average from what I can see on the Internet.
View Quote

OP knows 1.2% isn't keeping up with inflation.  They lose purchasing power as their savings is diminished by that invisible tax called inflation.

OP, forgot what Michael Burry so aptly warned us about so soon?  Don't know what he warned about?  Do a search on this forum.
Link Posted: 2/22/2021 10:12:46 AM EST
You should not be investing your emergency account... I for one think 3 months of expenses is very light for an emergency account. I consider 6 months to be minimum and a year to be ideal. I also have numerous investment accounts from stocks, market ETF fund, ROTH, and SEP. I also have a decent stash of PM’s as a store of a portion of my wealth.

You do you, but I do not think moving your emergency fund into an investment account is a wise option at all.
Link Posted: 2/22/2021 10:13:17 AM EST
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Originally Posted By Martlet:


T-Mobile is 4% for the first 3,000 and 1% for everything after.    AMEX was good for awhile, but has steadily declined.   I have mine spread between multiple accounts like T-Mobile to maximize the interest even if it's only for 3k at a time.
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Originally Posted By Martlet:
Originally Posted By HKPDW:
“For balances up to $25,000”.


I’m currently with Viobank and American Express FSB at .5%.


T-Mobile is 4% for the first 3,000 and 1% for everything after.    AMEX was good for awhile, but has steadily declined.   I have mine spread between multiple accounts like T-Mobile to maximize the interest even if it's only for 3k at a time.



I’m dealing with mid-sixes so...    
Link Posted: 2/22/2021 10:15:37 AM EST
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Originally Posted By 0hw0rd:
How much equity do you have in your house?
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@0hw0rd

About $75k
Owe $172k, roughly worth $250k.
Link Posted: 2/22/2021 10:34:01 AM EST
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Originally Posted By Bale2011:
Crypto
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ethereum has taken a $300 hit since yesterday.

sounds like a good buy opportunity.
Link Posted: 2/22/2021 10:40:47 AM EST
Check out VZ, XOM, SUN
Link Posted: 2/22/2021 10:47:29 AM EST
Your emergency fund needs to be left exactly where it is, or placed in a money market account with check writing privileges.

Anything else goes against entirely what an emergency fun is supposed to be.
Link Posted: 2/22/2021 10:51:02 AM EST
It's an emergency fund: you lose purchasing power in exchange for the ability to buff those emergency events. I'd be ecstatic earning any returns on it without the volatility of the stock market. Your savings can be wiped out instantly on a downturn in the market. I honestly think you have a pretty sound spot for your savings.
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