Where do you keep your emergency fund?

[snafu]

While we were not personally impacted, flash floods in our city in mid June caused some districts to be evacuated with 20 minutes notice. The ATMs either ran out of cash or lost power so I've increased emergency cash held in our small [home] safe to $ 500. We keep a $ 1,000. 'float' in chequing as it gives us a lot of bank services without fees. There is usually flex in chequing balance as income is direct deposit and I don't 'sweep' the excess until end of month. Our linked savings account is mostly a holding spot for major, upcoming/anticipated expenses like tax owing, annual insurance premiums, anticipated home improvements/repair, gifts to be purchased, holiday & vacation spending etc that can be tapped in an emergency situation.

When I first heard about the importance of an emergency fund I set up a separate Index [e] Mutual Fund and contributed over several months to $ 5,000. Lately it increased so substantially, I cashed out excess to fund 2013 tax preferred a/c.

[feh]

In addition to the automatic inflation protection, I bought my I-Bonds about 3 years ago, before the fixed rate component dropped to 0.0%... Back then it was at least 0.2%-0.3%, so most of my I-Bonds are currently earning between 1.48%-2.06%. Another benefit is that the earnings are tax-deferred, so I don't owe taxes on my earnings until I actually cash them out. And considering that I-Bonds continue to earn that inflation-adjusted interest for 30 years, that's a pretty good deal IMO.

Also - no state tax on I-bonds. Additionally, if you use them for education costs, no federal tax either.

[annibe11e]

My general emergency fund is with SmartyPig and is still being funded. It takes about 3 days to transfer into my checking, which is a deterrent from dipping into it. I have lesser emergency funds for car repairs and cat medical bills with FNBO Direct. The cat one may sound weird, but my cat needed emergency surgery in March and it wiped me out. She didn't make it, but I'm still paying for it. Having the fund also sets a sort of limit on what I will spend if anything like this should happen again. Once I have a larger EF, I will probably move it to a money market account.

[Goldy1]

roth ira. we have money in ing orange(forgot what they are called now). I think we have bonds we can cash in as well. I could call parents in a real bind(never had to and never will hopefully bc that means I went through all my safety nets first!!! )

[josht]

Whole life insurance is better than bonds...

[Petunia 100]

Whole life insurance is better than bonds...

If you sell it, absolutely. If you buy it, well, there's where you make your mi$take.

[bjl584]

Whole life insurance is better than bonds...

Whole life insurance is usually a bad deal. You are better off with term life insurance.

But, what does whole life insurance have to do with Emergency Funds? Life insurance is not and should not be thought of as an emergency fund. If you were to die, then your beneficiaries would benefit from your policy, but for emergencies while you are alive you will need cash.

[josht]

Misinformation. Proper whole life insurance will be accessible and will grow while also offering you a death benefit.

So it has everything to do with emergency savings. It's the best place for emergency savings because it is liquid, it has higher growth than a bond, cd or any other savings vehicle. That growth is tax-advantaged, and on top of all that you have a death benefit.

[Petunia 100]

Misinformation. Proper whole life insurance will be accessible and will grow while also offering you a death benefit.

Yes, you are indeed providing misinformation.

So it has everything to do with emergency savings. It's the best place for emergency savings because it is liquid, it has higher growth than a bond, cd or any other savings vehicle. That growth is tax-advantaged, and on top of all that you have a death benefit.

Let me fix that for you:

So it has everything to do with emergency savings. It's the worst place for emergency savings because it can only be accessed by paying a fee to "borrow" it, and has abysmal returns. That growth if you manage to achieve it despite the deck being stacked against you will be taxed at your highest marginal rate, and on top of all that you pay too much to have a death benefit.

There you go. You're welcome.

[josht]

Funny. Very funny but wrong. You can liquidate money from a life insurance policy at any time, that doesn't cost you anything.

And it grows with not taxation and if you die with it in tact it transfers with no taxation. In fact, it's the only vehicle that you can actually never pay tax on the growth ever if you treat it right.

I don't know how 6.52% growth with no taxes is bad.

[bjl584]

Misinformation. Proper whole life insurance will be accessible and will grow while also offering you a death benefit.

So it has everything to do with emergency savings. It's the best place for emergency savings because it is liquid, it has higher growth than a bond, cd or any other savings vehicle. That growth is tax-advantaged, and on top of all that you have a death benefit.

What good is a death benefit if your furnace breaks? An emergency fund should be something that you keep liquid and have easy and penalty free access to. It's for emergencies where you need to get cash in hand quickly and easily. No sense in over complicating what it is. While I agree that there is nothing wrong with trying to squeeze a little bit of a return out of your EF, it really should not be thought of or treated like an investment. Keep your investment portfolio and your EF as separate entities.

[Petunia 100]

Funny. Very funny but wrong. You can liquidate money from a life insurance policy at any time, that doesn't cost you anything.

Says you. Nonetheless, policies disclose all the costs in the fine print, as required by law.

And it grows with not taxation and if you die with it in tact it transfers with no taxation.

If it grows, the growth is taxed as ordinary income when withdrawn. That's tax law.

In fact, it's the only vehicle that you can actually never pay tax on the growth ever if you treat it right.

I see you have never heard of a Roth IRA.

[josht]

How do you expect me to have a discussion about something when you don't know what you are talking about? Read a book.

And Roth IRA's have contribution limitations.

[Petunia 100]

How do you expect me to have a discussion about something when you don't know what you are talking about? Read a book.

Lol. I am not interested in listening to a sales pitch (oh, excuse me, "discussion") about the wonders of whole life policies. I've done quite a bit of reading on the topic, thanks.

And Roth IRA's have contribution limitations.

No fooling? What a great tip.


I guess you were expecting that you would be the very first salesperson to show up here and enlighten the masses about whole life? Well, you're not.

[disneysteve]

So it has everything to do with emergency savings. It's the best place for emergency savings because it is liquid, it has higher growth than a bond, cd or any other savings vehicle. That growth is tax-advantaged, and on top of all that you have a death benefit.

And don't forget the 90% commission for the agent the first year and 6%/year every year after that. So that 6.52% "growth" rate is more like 0% or worse when you factor in the commission.

It is amazing that anybody, even the people selling it, actually believe this crap.