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Old 18-04-2018, 11:49 PM   #12
wealth_farmer
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Join Date: Dec 2016
Posts: 540
Thoughts about this article? https://www.betterment.com/resources...vice-is-wrong/

It states that one should jack up his emergency fund by 30% and then invest it into a 40/60 stocks bonds mix.
I don't like the idea of:
1.) chasing returns for my safety net funds. I just need to know 18k will be 18k when I need it. Inflation may or may not be a concern (depending on what kind of savings accounts interest you can get), but I feel the right way to grow my safety net funds, if required, is to set money aside for it as necessary and not betting on Mr Market to go my way.

2.) I don't like to pump up my safety net funds requirement by 30% just to pad it for a statistical 23% decline. It seems self-defeating. I don't need $23,377; 18k means 18k.

To me, a safety net fund is my insurance against a rainy day. It is also a deadweight on my portfolio returns by design (not that I count my safety net funds in my portfolio; my point is the theoretical extra returns I could get if I pumped the amount of my safety net funds into my market portfolio). I don't need it to be bigger than what my needs are, for that reason.

Last edited by wealth_farmer; 18-04-2018 at 11:52 PM..
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