rainy day savings

howyegettinon1

looking to put a rainy day fund to work, the interest its making at the moment id rather keep it at home as cash, at least the banks wont be making money of it

this money would need to be accessed quickly, what are the options availiable?

Dutchy

A safe.

Jim2007

howyegettinon1 wrote: »

looking to put a rainy day fund to work, the interest its making at the moment id rather keep it at home as cash, at least the banks wont be making money of it

this money would need to be accessed quickly, what are the options availiable?

So putting your fund to work means getting no interested on it as opposed to some interest... in that case in the pillow case, under the mattress, tin box buried in the garden... take your pick.

howyegettinon1

Jim2007 wrote: »

So putting your fund to work means getting no interested on it as opposed to some interest... in that case in the pillow case, under the mattress, tin box buried in the garden... take your pick.

if i need to withdraw the money from the bank, the fuel, parking and about an hour of my time would exceed the interest made greatly

I know eu are slashing saving rates across the board to keep the currency circulating so saving account are a very bad place to leave your money right now
any alternatives to banks where there is somewhat a decent rate availiabale?

Lyan

If you know nothing about the market put it in an S&P 500 ETF. If you are up for some learning then make a diversified portfolio of funds and stocks. It's the only reliable way to beat inflation and the interests rates while remaining liquid.

howyegettinon1

Lyan wrote: »

If you know nothing about the market put it in an S&P 500 ETF. If you are up for some learning then make a diversified portfolio of funds and stocks. It's the only reliable way to beat inflation and the interests rates while remaining liquid.

i dont, but i will look into that, the graph for s&p looks well. from the little i have read into stocks, i found investing in stocks in ireland is counter intuitive(not like us), by the time you pay broker fees and taxes on interest made etc, you dont make very much if anything. i will happily be corrected on that though if your willing to share the best way to go about this, or point me to some light reading

Lyan

howyegettinon1 wrote: »

i dont, but i will look into that, the graph for s&p looks well. from the little i have read into stocks, i found investing in stocks in ireland is counter intuitive(not like us), by the time you pay broker fees and taxes on interest made etc, you dont make very much if anything. i will happily be corrected on that though if your willing to share the best way to go about this, or point me to some light reading

Use Degiro for dirt cheap fees that you won't take any notice of. The tax situation however isn't it great. If you are looking to withdraw more than €1200 a year or so in profits you will have to pay capital gains tax. And on European ETFs you will have to deal with the 8 year deemed disposal law. And yeah a dividends strategy isn't that great in Ireland with the income tax charged on it at any amount.

august12

Lyan wrote: »

Use Degiro for dirt cheap fees that you won't take any notice of. The tax situation however isn't it great. If you are looking to withdraw more than €1200 a year or so in profits you will have to pay capital gains tax. And on European ETFs you will have to deal with the 8 year deemed disposal law. And yeah a dividends strategy isn't that great in Ireland with the income tax charged on it at any amount.

I have approx. 10 by Vanguard s and P 500 shares, getting a small dividend from them but they have increased significantly since I purchased through Degiro. I can't buy these particular ones anymore on the site, am unsure as to whether to cash in or let them roll for another 10 years till I reach the ripe old age of retirement.

Jim2007

Lyan wrote: »

If you know nothing about the market put it in an S&P 500 ETF. If you are up for some learning then make a diversified portfolio of funds and stocks. It's the only reliable way to beat inflation and the interests rates while remaining liquid.

Nonsense.

The whole point of a rainy day fund is for emergencies, so the money should be on demand. If you are putting money in the stock exchange you need to have at least a five year perspective, not next week or next month.

Lyan

Jim2007 wrote: »

Nonsense.

The whole point of a rainy day fund is for emergencies, so the money should be on demand. If you are putting money in the stock exchange you need to have at least a five year perspective, not next week or next month.

The cash can be very withdrawn quickly, that's what the OP requested. It works. Can even be cheaper than withdrawing from a savings account depending on the ammount.

Jim2007

Lyan wrote: »

The cash can be very withdrawn quickly, that's what the OP requested. It works. Can even be cheaper than withdrawing from a savings account depending on the ammount.

On the 19th of October 1987 the DJIA lost 22% in a single day, if you are putting your rainy day fund into stocks, then there is no point in having one, you might as well just invest the money along with all your other cash and just not have one.

Frankly, you are only fooling yourself if you have a rainy day fund in stocks.

Lyan

Jim2007 wrote: »

On the 19th of October 1987 the DJIA lost 22% in a single day, if you are putting your rainy day fund into stocks, then there is no point in having one, you might as well just invest the money along with all your other cash and just not have one.

Frankly, you are only fooling yourself if you have a rainy day fund in stocks.

That really should not be a big deal given the upwards historical gravity of the market. Though of course it goes without saying that you must posses a trinkle of medium to long-term outlook and emotional stability to enter the market. Temporary losses must be anticipated.

And I'll point out that the Dow recovered in barely two years and has gone from a low of 4k at the drop to almost 30k today.


OP, if that sounds too risky to you then look into bonds, or even prize bonds.

jimmy456

you don't put a rainy day fund into the stock market!

Lyan

jimmy456 wrote: »

you don't put a rainy day fund into the stock market!

How do you protect against inflation then? That will send your rainy day fun down the drain without you noticing.

Bubbaclaus

Lyan wrote: »

How do you protect against inflation then? That will send your rainy day fun down the drain without you noticing.

Do you know what a rainy day find is? Putting it in stocks would be absolutely mental

Lyan

Bubbaclaus wrote: »

Do you know what a rainy day find is? Putting it in stocks would be absolutely mental

It's really not all that risky if you go with an S&P 500 fund as I first suggested, but go with whatever suits your risk attitude. But at the very least find someway to protect yourself against inflation. Leaving big cash sitting around for years doing nothing is silly.

handlemaster

howyegettinon1 wrote: »

looking to put a rainy day fund to work, the interest its making at the moment id rather keep it at home as cash, at least the banks wont be making money of it

this money would need to be accessed quickly, what are the options availiable?

How much do you have ?

NSAman

Since we were kids, we were always told to have cash in case of an Emergency.

Piggy banks, cash under the bed, a safe, in the attic, no matter where you hide it, there should always be a fund available for emergencies.

Should that be money that “works” for you? that is debatable.

Personally, I have safes in various properties should something happen and I need money. This has been built up over years, has a definite fund in each location. it is never touched, and if touched, replenished immediately to the same amount.

Bubbaclaus

Lyan wrote: »

It's really not all that risky if you go with an S&P 500 fund as I first suggested, but go with whatever suits your risk attitude. But at the very least find someway to protect yourself against inflation. Leaving big cash sitting around for years doing nothing is silly.

And what if you need your rainy day fund suddenly in a week that the S&P fund happens to have fallen 15% and you have lost a large amount of funds because of it? You clearly haven't thought that through very much. You appear to be confusing a rainy day fund with a person's savings.

handlemaster

NSAman wrote: »

Since we were kids, we were always told to have cash in case of an Emergency.

Piggy banks, cash under the bed, a safe, in the attic, no matter where you hide it, there should always be a fund available for emergencies.

Should that be money that “works” for you? that is debatable.

Personally, I have safes in various properties should something happen and I need money. This has been built up over years, has a definite fund in each location. it is never touched, and if touched, replenished immediately to the same amount.

Ya. Sure you have LOL

Lyan

Bubbaclaus wrote: »

And what if you need your rainy day fund suddenly in a week that the S&P fund happens to have fallen 15% and you have lost a large amount of funds because of it? You clearly haven't thought that through very much. You appear to be confusing a rainy day fund with a person's savings.

Hey, I'm just trying to give him smart financial advice. I'm not here to argue what "rainy day savings" means. There is nothing wrong with giving him alternatives ideas at any rate.

Bubbaclaus

Lyan wrote: »

Hey, I'm just trying to give him smart financial advice. I'm not here to argue what "rainy day savings" means. There is nothing wrong with giving him alternatives ideas at any rate.

But you aren't giving smart financial advice, that's the point.

cefh17

Lyan wrote: »

It's really not all that risky if you go with an S&P 500 fund as I first suggested, but go with whatever suits your risk attitude. But at the very least find someway to protect yourself against inflation. Leaving big cash sitting around for years doing nothing is silly.

It's not smart advice though..

When is someone likely to need short term access to money (not necessarily cash).. car breaks down, repairs at the house or losing a job. Say for losing a job when does that sometimes happen, recession. So not only do you have them in a vehicle they shouldn't be in for short term access, but you're selling them for a heavily reduced price.

OP, imo keep a fair amount (say 6 months living expenses if you lost your job) in a 'high' interest savings account, say KBC to counteract some inflation chipping away.

Bob Harris

State Bond at An Post will give you 16% after 10 years or 1.5% AER. If you take it out before you'll get less particularly in the early years.
7 days to get your cash if you need it before maturity date. No fees, no tax.

Lyan

cefh17 wrote: »

It's not smart advice though..

When is someone likely to need short term access to money (not necessarily cash).. car breaks down, repairs at the house or losing a job. Say for losing a job when does that sometimes happen, recession. So not only do you have them in a vehicle they shouldn't be in for short term access, but you're selling them for a heavily reduced price.

OP, imo keep a fair amount (say 6 months living expenses if you lost your job) in a 'high' interest savings account, say KBC to counteract some inflation chipping away.

I never said he shouldn't have any cash at all. Of course you should keep a couple months worth of cash for emergencies. Not all your eggs in one basket and all that. Just do anything other than savings accounts really so you can beat inflation.

Jim2007

Lyan wrote: »

That really should not be a big deal given the upwards historical gravity of the market. Though of course it goes without saying that you must posses a trinkle of medium to long-term outlook and emotional stability to enter the market. Temporary losses must be anticipated

What is your definition of an emergency then - an event that requires urgent attention that does not need until the market comes back up????

Jim2007

Lyan wrote: »

How do you protect against inflation then? That will send your rainy day fun down the drain without you noticing.

The inflation rate is running at less than one percent and the point of having a rainy day fund is so that you have something to fallback on while you are waiting for the market to recover. Otherwise you will be forced to sell at a loss!

cefh17

Lyan wrote: »

I never said he shouldn't have any cash at all. Of course you should keep a couple months worth of cash for emergencies. Not all your eggs in one basket and all that. Just do anything other than savings accounts really so you can beat inflation.

To have a relatively small amount (as a portion of overall savings/investments) in an account that is close to matching inflation or just short isn't the end of the world, though not ideal. I wouldn't be keeping my emergency fund anywhere but an account I can get into tomorrow if needed, not when the market drops 10%+ and it's now less than I need

Heres Johnny

Accessed quickly, just put it in an on demand account. You won't earn anything on it but that's the price to pay for fast access. You can't invest this money, but when you have enough in your rainy day fund you can then look at the likes of what has been suggested here like a medium or long term plan. Don't do this if you don't already have a pension though.

Short term first, doesn't need to be massive a few months salary maybe
Pension second
Medium term savings/investments third

Jim2007

Lyan wrote: »

It's really not all that risky if you go with an S&P 500 fund as I first suggested, but go with whatever suits your risk attitude. But at the very least find someway to protect yourself against inflation. Leaving big cash sitting around for years doing nothing is silly.

Silly is trying to cover a risk of less that one percent by taking on a higher risk on money you can't afford to loose. You are way out of your depth.

Jim2007

Lyan wrote: »

Hey, I'm just trying to give him smart financial advice. I'm not here to argue what "rainy day savings" means. There is nothing wrong with giving him alternatives ideas at any rate.

Mate, you clearly don't know what smart financial advice is and giving bad advice is worse that giving none at all.

jimmy456

"investing in the stockmarket isn't all that risky" - tell that to all the people that were due to retire between 2009-2016

NSAman

handlemaster wrote: »

Ya. Sure you have LOL

Yup...just because you don’t, do not tar all of us as non-believers in saving for that rainy day.

TimeToShine

Keep 10k liquid in a checking or savings account and anything above that should be invested, if you haven't saved 10k yet you probably don't need to worry about investments.

Lyan

Jim2007 wrote: »

Silly is trying to cover a risk of less that one percent by taking on a higher risk on money you can't afford to loose. You are way out of your depth.

It's not simply about covering inflation losses, the growth is good too. Even if the market dropped 20% at some stage you could still potentially be withdrawing with a profit or breaking even. And of course I wouldn't advise putting everything in the market. Once you've got a solid six months worth of cash you can start making it work here and there.

Heres Johnny

Lyan wrote: »

It's not simply about covering inflation losses, the growth is good too. Even if the market dropped 20% at some stage you could still potentially be withdrawing with a profit or breaking even. And of course I wouldn't advise putting everything in the market. Once you've got a solid six months worth of cash you can start making it work here and there.

You're backtracking now and requoting other people's advice as your own.
Don't give financial advice if you don't understand it please. There's a reason it's a regulated industry. The man asked about a rainy day fund not long term investment strategy

Jim2007

Lyan wrote: »

It's not simply about covering inflation losses, the growth is good too. Even if the market dropped 20% at some stage you could still potentially be withdrawing with a profit or breaking even. And of course I wouldn't advise putting everything in the market. Once you've got a solid six months worth of cash you can start making it work here and there.

Just stop digging... with ever post your credibility gets less and less.

Lyan

Are we not allowed to give people alternative ideas? I never specifically stated I was advising him on a rainy day fund. The hostility here.

Jim2007

Lyan wrote: »

Are we not allowed to give people alternative ideas? I never specifically stated I was advising him on a rainy day fund. The hostility here.

When you give people bad financial advice, legal advice etc.. you can fully expect to be called out on it, because it has consequences for the OP and anyone else who might act on it.

Lyan

It's not bad financial advice, just different financial advice.

cefh17

Lyan wrote: »

It's not bad financial advice, just different financial advice.

It is different, and bad

Jim2007

Lyan wrote: »

It's not bad financial advice, just different financial advice.

Next you'll be telling us you went to the Kellyanne Conway school of finance.

Lyan

I'm not sure how some of the most basic and safe investment strategy advice given by many financial experts is misplaced in a thread on long term savings. No harm in letting OP know what else he can do. You guys can disagree but no need to make a **** competition out of it.

dennyk

Don't put your emergency fund in the stock market or mutual funds. The point of an emergency fund is to be a reliable pool of essentially liquid cash that you can access on short notice. Any interest or return you might earn on it is secondary to its purpose, and you should not go putting that money into a high-risk investment vehicle, or there is a very real chance that you may take a significant loss if you need to take money out when the market happens to be down. It also increases the time it will take to access your funds, which could be an issue if you have an unexpected expense that must be paid immediately.

Interest rates are poor at the moment, but there's really no easy workaround for that. No one is going to pay much more than ~1% or so on a standard savings account at the very most (and to get that, it'll have to be a monthly deposit savings account). Credit unions pay very little in the way of dividends as well, as they're subject to the same low interest rates as everyone else, and you can't even know ahead of time how much you'll get from them.

As for general financial advice, the typical recommendation for how to divvy up your savings is usually:

- Keep at least one month of expenses as a buffer in your current account and never let it dip below that threshold; this way if you have any issues such as an incorrect automatic debit or a late payslip deposit, you don't risk being overdrawn.

- Put funds into an emergency fund in a savings account accessible on demand until you have ~3-6 months of expenses in there. This fund is only for emergencies, e.g. an unexpected and necessary expense like a car or appliance repair, or to live on in case you lose your job. How much you need really depends on your personal financial circumstances; think about what amount would make you comfortable to have if you were to suddenly lose your source of income without notice tomorrow. If you draw from the account for one-off emergencies, then your monthly savings should go to topping it back up first.

- Contributing to your pension or PRSA up to the maximum age-based tax-relief threshold should be your next priority. This is generally the best return you'll get on your money, due to the tax relief.

The rest of your monthly savings should be divided up based on your financial goals:

- If you're saving for something in the short term, a few years or less (e.g. a deposit for a mortgage), you'd generally want to keep your money in something non-volatile, such as a savings account or a long-term deposit account. It won't earn much interest, but it will be there for you when you need it in a couple years.

- If you aren't saving for anything in particular or know you won't be needing the money for several years, that's when you want to start looking into other investment options such as mutual funds. Those are generally best for long-term investments; while the market can be quite volatile in the short term, it does tend to rise over the long term and historically has significantly outpaced any deposit account interest rates on average during most longer (10+ year) periods. Just make sure you read about the tax issues involved in such investments; for certain types of funds, you may be required to pay tax on the gains every eight years whether you've actually disposed of your investments or not, so you need to be prepared and have the cash on hand to pay the deemed disposal tax in those cases.

Bubbaclaus

Lyan wrote: »

I'm not sure how some of the most basic and safe investment strategy advice given by many financial experts is misplaced in a thread on long term savings. No harm in letting OP know what else he can do. You guys can disagree but no need to make a **** competition out of it.

Don't be a dumbass. You gave idiotic advice on what to do with a rainy day fund. You sound like a kid that watched a 5 minute youtube video about investing and think they know it all.

Lyan

That's pretty low tier ad hominem. Actually it's lower, it's just name calling. I can't really take you seriously.

Winning_Stroke

OP please don't put your emergency fund in the stock market... Please.

Options are few and far between these days for a safe way to beat inflation. Some like Prize Bonds (don't know how long it takes to withdraw...), me I just take it on the chin and have mine in a regular a/c.