Emergency accounts — all cash?

[Anonymous]

Zero in cash. I would do VOO for years and then just take from it depending on the cost basis as I get to choose it.
If you started buying VOO at $300, chances that it goes below are very small. It earns way more than HYSA. Long term capital and at cost basis ad nothing to my taxes. If my taxes are low because of unemployment, I choose the very earliest and cheapest patch to get away with not paying too much.
Down market last two years max. My unemployment lasts 1 day max.

[Anonymous]

Anonymous wrote:Zero in cash. I would do VOO for years and then just take from it depending on the cost basis as I get to choose it.
If you started buying VOO at $300, chances that it goes below are very small. It earns way more than HYSA. Long term capital and at cost basis ad nothing to my taxes. If my taxes are low because of unemployment, I choose the very earliest and cheapest patch to get away with not paying too much.
Down market last two years max. My unemployment lasts 1 day max.

And this is why internet advice from strangers is not to be trusted. This person is giving advice to themselves. OP, however, asked about where to keep an emergency fund, in case of unemployment. Not some outlier case whose employment lasts "one day max". Keep it in a HYSA, or some in a short(er) term CD so you can access it and there isn't downside risk. Now, if its something else, not emergency/rainy day fun, sure go wild.

[Anonymous]

One year is usually enough to have in cash - in some combination of savings, checking, jumbo money market at either a bank or Federal credit union or other Federally insured account.

[Anonymous]

Fed also worried about layoff. Have 5 months baseline minimum expenses in our regular bank account (just moved a bunch to investments and will move more if still employed a few months from now). A year's worth in money market and 4 months in i-bonds.

So I'm not too worried about short term survival but I am still scared about long term, structural unemployment. Emergency funds are one thing, but i still need to work more than 20 more years!

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We have $300K in a MMA earning 4.15%.

My spouse became unemployed at 59.5, and we have one DC in college, and one a HS senior. I want to retire next year, so we need a large cash buffer.

IMO, it's better to have 1 yr worth of expenses due to the roller coaster ride of the current economy.

Also, if you read through the jobs forum, there are a lot of people who have been unemployed for 1+yr.

Who gives 4.15?

https://www.schwab.com/money-market-funds

Just making sure people understand these types of accounts also carry fees. So the net is not 4.15 percent.

Re fees--that is incorrect. That 4.15% is the current net yield. There are no fees (there may be minimums/different classes for different yields), but the funds' internal expenses are reflected in the advertised yield. Vanguard is at around 4.2% (they typically have the best rates as their expenses are lower) and Fidelity not far from that. You can expect these rates to slowly drift down (current tbill rate is ~4.0%, which is the rough reinvestment rate currently).

[Anonymous]

I think you should save till you have a year’s expenses

[Anonymous]

Anonymous wrote:

Anonymous wrote:Zero in cash. I would do VOO for years and then just take from it depending on the cost basis as I get to choose it.
If you started buying VOO at $300, chances that it goes below are very small. It earns way more than HYSA. Long term capital and at cost basis ad nothing to my taxes. If my taxes are low because of unemployment, I choose the very earliest and cheapest patch to get away with not paying too much.
Down market last two years max. My unemployment lasts 1 day max.

And this is why internet advice from strangers is not to be trusted. This person is giving advice to themselves. OP, however, asked about where to keep an emergency fund, in case of unemployment. Not some outlier case whose employment lasts "one day max". Keep it in a HYSA, or some in a short(er) term CD so you can access it and there isn't downside risk. Now, if its something else, not emergency/rainy day fun, sure go wild.

Indeed they gave awful advice. Short-term funding needs should _always_ be stored in risk-free options with no downside risks, like savings, CDs, etc.

[Anonymous]

Anonymous wrote:Interest rates for HYSA are slow to rise and quick to fall. What about keeping 3 months in a HYSA and laddering the rest? So an additional 3 months worth of expenses in a 3 month CD and the remainder in a 6 month CD. The you can access money if you need it, but you guarantee a 4+% interest rate, at least for the next 6 months.

This is good advice. Fed meeting on 9/17 and rates expected to drop. Lock in good rates now with a CD.

My company manages a lot of internal cash and we're laddering t-bills (similar to CDs) for this reason (at least that's what the CFO told me at happy hour last week).

[Anonymous]

Keep saving, OP. I don't want to be a downer but DH just lost another contractor from his team. We don't know why it took longer for this contract to get slashed compared to others, but she was given 10 days notice at the end of August.