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*Official* Shiny Things club - Part 2

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Old 18-04-2018, 09:54 PM   #1
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*Official* Shiny Things club

Shiny Things

Ex Options Trader from Investment bank!

I r the...
...#1 fan!!!


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Old 18-04-2018, 09:54 PM   #2
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Old 18-04-2018, 09:54 PM   #3
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This is a continuation thread, the old thread is here
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Old 18-04-2018, 09:54 PM   #4
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Emergency fund is separate from the portfolio. Do NOT mix.

The portfolio will only contain equities, fixed income securities, and any cash you intend to invest. If you can get an cash account that pays >2% interest rate for SGD, you can count that as part of your bond component. HOWEVER, the sum inside that you count as your bond component must NOT be anything other than investible cash. Otherwise, the investible cash in your portfolio is a bit of a drag on returns and should be a small percentage in the first place.
Thoughts about this article? https://www.betterment.com/resources/safety-net-funds-why-traditional-advice-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.
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Old 18-04-2018, 10:09 PM   #5
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Old 18-04-2018, 10:11 PM   #6
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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.
Conflict of interest?

He is an employee of betterment.

Betterment doesn't earn money from investors if they leave the money in cash savings.

Furthermore, the bond returns, after deducting expenses and fees, might not be so different from returns in savings account, SSB, or fixed deposit.
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Old 18-04-2018, 10:35 PM   #7
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part 2!
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Old 18-04-2018, 10:47 PM   #8
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Up for part 2
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Old 18-04-2018, 11:10 PM   #9
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Part 2 - I was here
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Old 18-04-2018, 11:22 PM   #10
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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.
Doesn't make sense. Shouldn't your emergency fund be liquid? If you need the money urgently, then what?
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Old 18-04-2018, 11:25 PM   #11
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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.
Potential conflict of interest aside.



The point of the emergency fund is that you know you have x amount of money available for use when you need it. Consider that the scenario that the economy tanks, which also sees the market tank, and you just got retrenched. Then what? It may not be so painful if your emergency fund has been growing for the past 10 years and its value is still greater than the initial amount even if the market halved. On the hand, what if you only had dumped your emergency money into the market 6 months ago only to see it tank 25% and you need to access it?


Now, I'm not against putting a portion of your emergency stash in something like SSB. That's fine, except that you have to account for the time required before you can receive the money after redemption.
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Old 18-04-2018, 11:49 PM   #12
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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.
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Last edited by wealth_farmer; 18-04-2018 at 11:52 PM..
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Old 19-04-2018, 12:26 AM   #13
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Another point to add to what I wrote above: the emergency fund is more than just to meet expenses in the event of retrenchment; it is also to meet emergency expenses such as medical bills, car repairs, or air con repairs. It is there to meet sudden short term needs. Whille you can put some of those on a credit card, card interest rates are heavy enough to make it a dicey move.
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Old 19-04-2018, 02:21 AM   #14
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A faithful reader and supporter here
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Old 19-04-2018, 06:18 AM   #15
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Where to get Shiny's ebook "Rich By Retirement" (PDF or Kindle version)

5 minute summary - [1], [2]

Last edited by salmonella; 04-05-2018 at 11:31 AM..
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