Where do you put your emergency funds?

[kingsfall]

Hi as you know the common financial strategy is to set aside emergency funds or money you'll use in the near future (money that cannot weather the ups and downs of the financial market) and set aside another set of money for investing in the long term (stocks, bonds, etc)

my question is: for those emergency funds, which could be quite hefty, where do you put it to make the most out of it? (prudential plans, banks fix deposit, etc)

thanks alot for your feedback

 

[kebinu]

It can only be at banks.

 

[lil-athena]

In CIMB StarSaver - not entirely accessible due to lack of ATMs around (so not tempted to spend) but liquid enough to be withdrawn anytime.

 

[realwords]

Hi as you know the common financial strategy is to set aside emergency funds or money you'll use in the near future (money that cannot weather the ups and downs of the financial market) and set aside another set of money for investing in the long term (stocks, bonds, etc)

my question is: for those emergency funds, which could be quite hefty, where do you put it to make the most out of it? (prudential plans, banks fix deposit, etc)

thanks alot for your feedback

it must be liquid and available upon request, so no long term plans with hefty penalties for discontinuing.

I must say the best right now seems to be the ocbc 3.05%. Even with just one criteria fulfilled it's at 1.05%. Best returns seen on the market so far.

 

[makeupconnect]

mine is cimb... checking account with ok interest, maybe 0.8%?

 

[endlssorrow]

i shift to ocbc 360 liao

 

[Shiny Things]

my question is: for those emergency funds, which could be quite hefty, where do you put it to make the most out of it? (prudential plans, banks fix deposit, etc)

The only right answer is "in a bank account". If you stick it in shares, you can lose 20% of your fund right when you need it. If you stick it in an insurance plan, you have to pay punitive interest rates to get at it, and then repay the loan when you're done. In a fixed deposit, you have to pay break fees and wait for the cash to move back to your regular account.

I keep mine in a savings account. The interest rate is stuff-all - 0.15% last I checked - but if I ever get fired I know I'll be able to pay the rent for nine months while I hunt for a new job, and I won't have to wait to get at the cash.

 

[kingsfall]

thanks guys for all your suggestions!!

 

[foxer77]

put it int0 FD like uob for 13months 1.08%. very fast & good intrest. if u need it anytime u can just withdraw it just that u get pro rate intrest or non. no penaity on the principle amount.

 

[highsulphur]

put it int0 FD like uob for 13months 1.08%. very fast & good intrest. if u need it anytime u can just withdraw it just that u get pro rate intrest or non. no penaity on the principle amount.

First choice should be ocbc unless you have more than 50k

 

[yukita]

i shift to ocbc 360 liao

This is the current best imo

 

[makeupconnect]

Has anyone done the sums of placing it in a fixed deposit and if emergency, just withdraw in advance?

At worse no interest and just some admin fee? If no need to use, can earn FD interest?

Just thinking out loud.

 

[w1rbelw1nd]

This is probably a bit off topic, but just wondering if the decision to set up an emergency fund is a financially sound one...

There are many "cheap" unsecured loans that is easily applied and granted by banks. Coupled with the low probability of an emergency and the opportunity cost of placing the money in e emergency fund, doesnt it make sense to just screw the emergency fund if you are a normal salaried worker and just invest everything?

Just as an example:

Probability of emergency happening in a year 20%
Funds needed in emergency 30k
Returns on investment in a year 4%
Cost of bank loan 12% per year

Returns on decision made = 30k* (-1*0.04+.2*0.12)= -$480

Are there other factors in play?

 

[starfish.starfish]

This is probably a bit off topic, but just wondering if the decision to set up an emergency fund is a financially sound one...

There are many "cheap" unsecured loans that is easily applied and granted by banks. Coupled with the low probability of an emergency and the opportunity cost of placing the money in e emergency fund, doesnt it make sense to just screw the emergency fund if you are a normal salaried worker and just invest everything?

Just as an example:

Probability of emergency happening in a year 20%
Funds needed in emergency 30k
Returns on investment in a year 4%
Cost of bank loan 12% per year

Returns on decision made = 30k* (-1*0.04+.2*0.12)= -$480

Are there other factors in play?

Have considered the same so I decided on a hybrid. I put like just 3 months of required expense in Ocbc 360 not the 6-9 months like what norm advise. Then will take unsecure loan if emergency extends beyond. If just 3 months of expense I don't see a huge opportunity cost loss.

I think also depends what one categorized as emergency - loss of job, sudden medical issues etc.

 

[Bedokian]

Emergency fund is like an insurance - you do not know when you need it, but it is better to have it than having none at all. And as the Chinese saying goes - 不怕一万，只怕万一。Most of the time the fund acts as an insurance against major issues such as loss of job (income), sudden requirement for a huge expenditure (medical, "bail-out" loan, etc.) for yourself or family members.

Though there may be opportunity cost in holding such a fund, i.e. low or no returns, but this would be a compromise for liquidity. It would not be prudent to place such a fund in the market as, who knows, the time that one needed the fund would be at the market's lowest point. To have loans would exacerbate the situation, instead of helping.

 

[greddy88]

Probably offtopic also..
In addition to those mentioned above.. I also have emergencies for bigger shtf scenario.. liquid cash in milo tin and precious metals.

Okay.. not exactly milo..enfa tin.. after my kids finished it lol!

 

[DarknessFire]

One way I read on some website say that you can try splitting the money into parts, put them into short term fixed deposit/bonds every month, and if there is no need for the money when the fixed deposit/bonds matures, put them into fixed deposit again.

Quite confusing for me to explain, so an example would be this:
Emergency fund: 20k
In bank: 5k
Time before maturity:
1 month: 3k
2 months: 3k
3 months: 3k
4 months: 3k
5 months: 3k
Once maturity hits, if nothing to use for, take a 6 months deposit again for that 3k and repeat.

This has the benefit of simulating pay day if you do not have a job and also to reduce temptation of just spending everything in one go. Also, most of the time(excluding now with OCBC 360 account), fixed deposit/bonds have higher returns then just putting it inside the bank.
Of course, during real emergency when you need lots of money, this method would fail badly.

 

[wts2013]

Besides ocbc360 the best in town interest rate, consider placing multiple stepup deposits, low risk of losing interest if u decide to terminate as u get the interest credited every quarter plus increasing interest rate every 6mths, haha. Then if u see a higher FD or stepup deposit, just switch camp lor, hahaha

 

[starfish.starfish]

Probably offtopic also..
In addition to those mentioned above.. I also have emergencies for bigger shtf scenario.. liquid cash in milo tin and precious metals.

Okay.. not exactly milo..enfa tin.. after my kids finished it lol!

Hi serious ah?! Should try to get some interest out of them, right ?

 

[crystalnox]

Probably offtopic also..
In addition to those mentioned above.. I also have emergencies for bigger shtf scenario.. liquid cash in milo tin and precious metals.

Okay.. not exactly milo..enfa tin.. after my kids finished it lol!

That's high risk, in the event of a break in, fire or accidentally discarding it by a family member.