I have gone out of my way to increase the amount I am investing due to the current reduced asset prices. Generally by cutting back on some non essential spending, not at the expense of my emergency fund. I did this in '08-'09 and back in '00-'01 as well. Once the market normalizes I will probably return my investment levels to normal and spend a bit more on myself and projects around the house again. The amount of cash I keep on hand at the bank has not changed. Although I may need to start adjusting it for inflation.
I have 1 year of cash reserve for a worst case situation. I find that this and a recent investment in 1 year CD (2.65%) helps my personal risk tolerance for the worst, worst case market scenario. Only a matter of time until the market recovers. Nice presentation.
I follow the generally accepted guidelines of keeping a 6 months of expenses emergency fund. In addition I have different sinking funds for longer term items (car replacement, home improvement, vacations) etc that I save for every month All of that gives me the peace and security I need to weather the storm of the investing climate
I'm retired with 2 pensions plus social security, a nice cash reserve, and a ton of equity in my house. I sleep well. What really ate into my savings was health insurance. I retired at 61 and had to buy insurance until I could get Medicare. I didn't qualify for a subsidy under Obamacare so my wife and I spent $20K a year on health insurance during those bridge years to Medicare. People lose their health insurance when they get laid off. Their cash reserves can get eaten up pretty quickly buying health insurance.
Your bloopers that you have started adding to the end always give me the giggles! When we were doing online teaching I had to create a few videos for my students explaining different concepts and my gosh it was challenging! The number of times I had to restart or just went "blah" was ridiculous and that's what your bloopers make me think of! And also, of course, as always, loved the video and the information. :-)
it's like when you talk to people live or in person - things go great. Then you sit down, stare at a camera in a room by yourself and sometimes those words just disappear or you are trying to get a specific tone, or a truck drives by LOUDLY...any other number of things. Filming is just much harder 😂
Given a job scare that I just went through (I retained my job but had to take a pay cut), I would urge anyone who is facing uncertainty at work to have an 18-36 month emergency cash reserve. This is too scary of a situation to throw a Hail Mary pass (i.e. load your 401k) when you don’t know what’s coming.
Currently I have 2 years worth of cash on hand. I am six months into my retirement at this time. Dividends/interest currently cover about 90% of my monthly withdrawal so as long as the dividends don't get cut, the reduction in account value during the first half of this year is not a huge deal long term. As always I thought your content was spot on in the video.
I am 22 years into my retirement. I haven't touched my savings or investments. I never earned more than 50K in my life, but worked overseas so I get to save most of my pay. My pension and SS is enough to cover my expenses.
I agree 100%! After 2020 shut downs we kept investing & started putting money back- 2 years later- the stock market & inflation doesn't bother me as I know I can afford whatever happens. Sadly those that live paycheck to paycheck that didn't change their ways after 2020 will pay dearly & feel this the worst!
I appreciate your bold and definitive stance on holding cash at this time. I watch multiple finance channels, and they all are recommending the same thing. I have peace of mind because of my 6 month emergency fund and feel confident maintaining my dollar cost averaging strategy through this volatility because the market has always rebounded.
My wife and I have the same tension. I want to invest everything and she wants to hold onto a lot of cash and it kills me, lol. We are a two income family and are holding over 6 months of cash in out emergency fund. I would rather be at two or three but my wife is right that it does bring a sense of security having that cash available. Anyways, good video!
I just spent 15 months ( up to end of February 2023) living from such savings before collecting my first german state pension (social security if you're an American). Having enough savings, plus having a small life insurance pay out, I sailed through. In the last few months, a company pension is taking longer to start being paid, and I just had to unexpectedly replace my washing machine and I'm still not losing any sleep. Having enough cash saved means not worrying and definitely helped me ride out market volatility, my stock portfolio is still down, but will recover. Have a nice day everyone.
Like many an investor, I've deployed available cash in attempts to time the market, and got that wrong as often as right when buying the dip with certain stocks and ETFs. So now I remain fully invested where the portion of my available capital allocated to retirement is concerned, and contribute to my accounts on a dollar cost average basis timed to my biweekly pay. That said, saving cash to an emergency fund available for crises unrelated to investing is financial common sense for the reasons you cite. The emotional comfort you gain from knowing you've enough cash to survive a crisis is priceless. In this way, you're investing in your own or family's welfare and general resilience when met with a job loss, a major medical issue or house repair, etc.
I have gone through >80% drops multiple times with my bitcoin. can still sleep without any cardiovascular issue and fully confident it'll always go back up like s&p 500. (can't say for all other coins though) Yes, I agree cash is king for now.
Hi Erin. Solid good advice from you young lady as usual. I keep about 1 year’s worth of salary in cash reserves. It may be a lot but I am a little bit closer to retirement now than you and I am pretty cautious as well. Have a great week!
I am here just for the outtakes. The whole video could just be an outtakes So funny when you see her getting so mad. Also she tried very hard to put together a nice video. Nice job Erin we noticed your extra efforts
Totally concur. In a downturn is a great time to add more to 401k or other investments. It's a terrible idea to reduce investments as much of the market's return will happen as we exit the bear market
@@jayhimes5016 I agree. When you put money into the bear market it will help you recover faster once it turns around. Since you are buying more share during the bear market it will also help you make more dividends and it will help you buy more share.
@@billsmafia2453 You can't perfectly time the market but that wasn't so much my point as trying to say that now is the time! Pedal to the metal on buying beaten down quality stocks that are on sale!
I have a taxable brokerage account as a middle ground between cash and retirement accounts, and I am in the process of selling to boost cash. In reviewing my investments I realized it's time to sell.
Nice video and good advice. 3 to 6 months of living expense is about right for an emergency fund. I keep a little over 6 months and I also try to keep more of that emergency fund into higher paying interest accounts. With rate as high as they are now days, it's pretty easy to find savings accounts that pay 1% or more. Not a lot but better than the .01% a lot of banks pay. Nice video again Erin and I like the bloopers at the end, funny.😆
Good Stuff. I especially liked that you took the emergency fund into retirement. I am not passing the pillow test at this point so the emergency fund is going up. Thanks for the advice.
Hi Erin, great video and great advice! I too have about a 6 month emergency fund. And as you put it, that will make me sleep better at night knowing i have that money available if I need it. You would make a great psychologist. A sweet voice and you know how to calm people down and remind them that investing in the market, and/or a 401k is a long term investment. Loving your outtakes and your facial expressions are priceless🤪 And I looks like you could have some great dance moves 💃 Have a blessed day! 😊 P.S. I bet all that construction will increase the value of your house 😁 Which is another great way to put your money to work😊
We are also finishing our basement - adding a bathroom, bedroom and living room - so there is a fair amount of construction happening in our house 😂 and that's the goal - to increase the value of the home when we need to sell in a handful of years. (PS I broke my index finger carrying the shower about 4 weeks ago - I just take my wraps off to film 😂 )
@@ErinTalksMoney I’m soo sorry to hear you broke your index finger. Ouch! 😞 that must’ve hurt like crazy! Sending a hug 🤗 Two of my friends and I bought a flipper house a few years ago and the basement was just four walls, so we built a master bedroom with a master bathroom tub and shower, a walk-in closet, a living room and a laundry room. And remodeled the kitchen, put in brand new windows though out, re-did the floors and took off the old roof shingles but had a roofing company put the new roof on, so we could sell the house with a warranty for the roof. And did the landscaping. Bought it for $168K put $25K into it. Did all the labor ourselves except for the roof. And it sold in 3 days for $270K
I've always had lots of cash. Right now it is up to 40% of my stash, but only because of lower values of my equities. I expect my equity positions to slowly rise and my cash/bond positions to go down as the markets recover. My spend rate is very low in retirement. Before retirement, my savings rate was high.
I personaly believe that cash reserves and emergency funds are useful only in 2 cases: - for peace of mind (which personally doesn't apply to me, i have piece of mind knowing that i am following the optimal strategy, ignoring irrational fears) - if you will need some money in a mid-near future, and you dont have enough in liquid investment to be able to use that in case of a big market drop If you have a very large liquid investment, then you do not need a cash reserve, because worst case scenario, you will just sell your investments at a loss and use that money.. that is a risk that you will always have when investing, so it doesn't matter if its a short term or a long term risk.. the risk is always there if i dont touch that money, but then there is a market downturn when i go to pension, that's the same issue.. i dont fix the issue just by keeping cash reserves, i just push it back to retirement... which is not necessarily a good thing I only keep about 5k in cash for my day-to-day spending, everything else is invested in liquit ETFs (and some not-so-liquid pension funds), as long as one can sleep well at night with this arrangement, i believe is the best one
I think people also need to factor in their "income levels" (for lack of a better term.) As an example, a family making $40K is going to be hit harder by a setback than a family making $200K. Yes, high earners can be in for trouble if they lose a job with no savings, because they tend to have higher expenses. But low earners tend to be exposed to a larger number of more impactful expenses than just job loss. For example, an unexpected water heater replacement can really hit a low income family hard, whereas it is merely a nuisance to a higher income family.
True. There are some costs that are the same across income levels - a fine is the same $ amount, no matter your income - but there is a bit of scaling with the value of your assets and your peer group. Our household is on the ‘poor’ side for income in our area, but we also have one reliable car not two to gas up and insure. We have a cheap house - and never had enough income to qualify for an expensive one. Our kids are homeschooled instead of expensive private school, and so their homeschooled peers (from other single income households) have cheap/free expectations for activities and toys. We also have spent a long time paranoid that the money is not there to cover debt so we avoid any ‘optimistic’ debts that people get into when they have a lot of wiggle room to cover expenses. In the end I think burn rate and income tend to scale pretty closely. And when you are poorer you get the bonus that no one - the government or peers - expect anything from you.
Emergency fund is important, but so is the ability to have timely delivery of that fund, which an emergency usually requires. Some people may not accept cash, or wire, or even personal checks. Some may accept certain credit cards but not others. If you pay by CC, you have to make sure its credit line is enough to cover it. In short, you need adequate **payment methods** at your disposal so you can pay. For instance, posting bail and funeral services usually don't accept personal checks, so having just a bank account is no good.
And on topic. I love dollar cost averaging and it’s currently what I’m doing in my portfolio. I class my physical Precious metals as my emergency fund as well as wealth preservation. They are also easy to liquidate. With no loss of purchasing power, such as fiat currency. Also beware! Holding cash in the bank , even though fdic approved. Is not safe. It’s called a bank “bail in”. I believe this is where it’s headed. So be careful. Just my two cents lol
I appreciate your two cents! The subject of bank bail-ins seem to slowly making a few headlines - and they were very much a reality in Cyprus...so, who knows...
@@ErinTalksMoney yes definitely! Look at what happened in Canada with frozen bank accounts (under the terrorism act lol), also it’s happening in a province in china, where everyone has lost all their money as the bank done it. Just always best to be cautious and keep your ear to the ground lol.
@@duanecox9327 I just recently read, that the fdic only holds 2 cents on every dollar. AsWell as they have different thresholds on payouts etc. so I would err on the side of caution. Remember physical gold and silver coins or bars, maintain wealth and are also easy to liquidate. And hold no counter party risk.
I just found your channel on youtube i watched this video and the one on 401k balance by age and learned so much i didn't know thank you for that and im definitely gonna keep interesting and add more to it not less
Good stuff. Yeah everyone should keep investing for sure. I like to keep a six month emergency fund and my sinking funds in an online high yield savings account. Savings accounts are jumping fast we should be at or over 2% soon, not bad getting 2-3% on your cash reserves that is also very liquid (takes 2 days or less to get to).
Emergency funds should definitely be treated like insurance. What I do is take my emergency fund amount at the beginning of each year, then multiply it by 5%, then divide that number by 12. This is the “premium” I transfer to the account each month to stay ahead of inflation.
Hi Erin! We have about a 3 month emergency fund set aside. I would like more , but took a 50% pay cut last year for my mental health and to get out of retail. We are a 2 income household which helps but have 2 small children and also paying for me to go back to school right now as well. We are still contributing our company match to our 401k right now at 6%, but will bump up all savings amounts once I'm back in a higher paying job and I don't have daycare bills either in a few short years! 🙂 Keep the videos coming, we love them!
Hey Brent! I recently read a book called the Rule of 30 - and it discusses how you can adjust your savings rate over your working years - reducing it when you are facing daycare expenses for example then bumping it up higher during years when you face less expenses, and still come out right on track. It is from a Canadian economist - so not a straightforward application to US and our financial system (like Social Security) but still interesting if you like to read about finance. 😊
@@ErinTalksMoney I do like all things finance so I will take a look at it. Another good thing is my mortgage will be paid off in my late 40s as we did a shorter term so I know I will have time then to really make a dent as needed.
Three months for me. Probably a little light but I figure it’s a insurance policy that doesn’t cost me anything and makes a really low Remind of interest
great video. I really like the content. The point proven winning moment was so funny - it was relatable because I work for government too. maybe I need emergency fund.
I think a year's worth of expenses is okay but a year's gross salary is great. I'm in the "pay off your house early" camp so I hope to be doing that soon. Afterwards I'll start saving for another one and make the one I'm in into a rental.
Cypriots and Greeks would probably disagree with you about keeping money in guaranteed, insured banks. I try to have a year's worth of "cash" that I set aside for the following year. I sell stock in November / December to optimize my taxes (gains vs. losses), then I buy throughout the year. I always keep assets at least one year to avoid short-term capital gains.
Erin this may not be the correct show but you talked about you an your husband eating beans ionstead of stake. I love bush beans I am just wonder what you eat with the beans to "make a meal" Thank you
Over the years if I would have just put my money in my account and forgot about it, I would have done much better. I have a decent nest egg and had to retire recently at 55 due to some health issues. I have a decent pension and no bills so I am not starving. I may go back to work next year more out of something to do instead of needing money. One thing, I always hear you mention. 401k, 403b, Roth but I have never heard you mention 457 accounts which is what I have lol. Take care
When I was young and dumb and poor I was pretty happy. Now that I'm old and smart and have lots of money laying around I can't sleep at night worried about losing and protecting all that money.
well that's good!! I've had videos where I just powered through thinking, "no one will hear this" - but then inevitably I get a handful of comments saying, "what was that noise in the background" 😂
Would you recommend something like a CD or I-bonds for your emergency savings that way it's doing a bit better than a savings account? For your question, I keep about 6 months as well. I had a year but my advisor backed me down to 6 months. I'm retiring early in the next year or two so may be jumping that up to about 3 years but I'm easily talked out of that stuff so we'll see.
I currently use a mix of I-Bonds and a money market account. I think CDs are great as well. I-Bonds and CDs can have limited periods where that money isn't accessible - but after that window - there is just a loss of interest, but the money is accessible. So just make sure you can access funds when you need them 😊 good luck on your retirement, it's so close!!
I believe that pay can be held for a couple of months for no reason while in the US military. An emergency fund is really nice during a PCS as payments are generally reimbursements, or if there is an increase in the number of dependents. Granted I believe there is Airmen & Family Support Center or Air Force Aid Society that can help out with issues. As it stands, I have an emergency fund that fluctuates between 25% and 50% of my yearly income. I generally save cash until I find something to invest in, and then dip into the emergency fund to invest up half of my emergency fund. If I get to about 50% and haven't found anything worth pursuing, then I move enough over into a brokerage account to bring me back down to about 50%. My situation allows me to only really need 3 months of an emergency fund. I have insurance that will cover most anything major that could happen, and if I ever find myself in a situation where I lose my job and can't find another in that time, I think there would be bigger problems to worry about; like the US no longer exists problems. So the cash wouldn't be helpful anyways. lol
Hi Erin, ...new to channel, love your advice. What you you think of I-bonds or mutual funds? Working on retiring in the next 2yrs. Emergency fund of 6 months. Need some advice, thxs!!
Erin, can you do a video on how much a military retirement is worth? I cringe when I see someone retire after 10 years of service, giving up on hundreds of thousands of dollars in retirement pension and VA!
Why is it that people go out of their way to take advantage of a great sale at the local supermarket, but run the other way when the stock market is having a great sale? Personally, I am stocking up on as many goodies as I can afford and fully expect to reap the rewards down the road.
Erin, be careful, if banks get in trouble they will now do a bail in. They could limit or freeze accounts while they figure out the finances. Congress passed the bail in policy after the 2008 bank crisis.
Erin, great video! My wife & I have plenty of cash. I wonder what the formula is for depreciation due to inflation? If you have $100,000 in cash and inflation is 9.1% for a month how much of your cash has disappeared?
Thanks again for your insight! I have a pretty good amount in savings right now, but I’m trying to shift some of it to investments given the current state of affairs. My question for you, and maybe this can be answered in a video: I’m kind of caught in between. My wife and I currently own a condo, but we’re hoping to buy a house in the next 5 years or so and additionally, we expect that we’ll both need new cars in that same time period. I obviously don’t want to have to pull from investments to help pay for these big ticket items, but at the same time it’s frustrating to have to keep building accessible funds because I know it’s losing its value just sitting in a savings account. Do you have any thoughts on how to manage feeling caught in the middle? Once again, thanks a lot. You have great delivery and well thought out ideas. I’m glad I found your channel.
Erin - I have my emergency funds in a mutual fund account, totally separate from my main accounts. Do you suggest moving them into some other more secure account?
Yes. You want cash for an emergency and you will want it quickly at the full amount. Markets can go down as well as up. It would be bad if you need cash for the next six months and the mutual fund was down 20-30 percent. You are not suppose to be growing your emergency fund by investing it. You putting risk into something that was suppose to be insurance for emergency.
Excellent thought on keeping X amount of cash on hand when starting a business. When I started mine in 2005, I had X set aside for all start up and 1 year of ongoing start up costs. I also had 2 years of personal expenses set aside. Net net? I had little/no financial stress as the business was starting up.
Erin, I certainly agree with your video. What do you think about low commission, high cash value, whole life insurance (infinite banking concept)? Might I suggest you look into it and make a video. I would be really interested in your views.
Sorry but a loss on paper is a loss whether you move it or not. There is no absolute guarantee of any re-growth of those funds. Yes historically based on U.S stock market it comes back but not in the absolute sense is it guaranteed. For those who are overly cautious and are student's of history--- this is always the real fear.
I think of an emergency fund as investment insurance. Yes, you may pay a premium through inflation, but it's worth every penny when you need it.
I love that analogy, so spot on! 👏
And to add to this, the emergency fund should be stored in physical gold and silver and a little bit of fiat.
I have gone out of my way to increase the amount I am investing due to the current reduced asset prices. Generally by cutting back on some non essential spending, not at the expense of my emergency fund. I did this in '08-'09 and back in '00-'01 as well. Once the market normalizes I will probably return my investment levels to normal and spend a bit more on myself and projects around the house again. The amount of cash I keep on hand at the bank has not changed. Although I may need to start adjusting it for inflation.
I have 1 year of cash reserve for a worst case situation. I find that this and a recent investment in 1 year CD (2.65%) helps my personal risk tolerance for the worst, worst case market scenario. Only a matter of time until the market recovers. Nice presentation.
In 2020 I reallocated my 403b to more conservative since I retire next year. Have cash for about a year of expenses. Loved the outtakes 😂
That's so exciting - I hope you LOVE retirement!!
I follow the generally accepted guidelines of keeping a 6 months of expenses emergency fund. In addition I have different sinking funds for longer term items (car replacement, home improvement, vacations) etc that I save for every month
All of that gives me the peace and security I need to weather the storm of the investing climate
So much sound financial advice is worth millions, but those outtakes at the end are simply priceless.
Good, advise I'm there. over three years saved up in cash. The outtakes show how hard you work on these Erin. Thanks for the hard work.
I'm retired with 2 pensions plus social security, a nice cash reserve, and a ton of equity in my house. I sleep well.
What really ate into my savings was health insurance. I retired at 61 and had to buy insurance until I could get Medicare. I didn't qualify for a subsidy under Obamacare so my wife and I spent $20K a year on health insurance during those bridge years to Medicare. People lose their health insurance when they get laid off. Their cash reserves can get eaten up pretty quickly buying health insurance.
Would hate to argue with you about money! You have all your bases covered! Hope your business is going well!
Thanks Frank!
The business is going well - and most important - I have more time to enjoy life and I am happier than I've been in years 😊
Your bloopers that you have started adding to the end always give me the giggles! When we were doing online teaching I had to create a few videos for my students explaining different concepts and my gosh it was challenging! The number of times I had to restart or just went "blah" was ridiculous and that's what your bloopers make me think of!
And also, of course, as always, loved the video and the information. :-)
it's like when you talk to people live or in person - things go great. Then you sit down, stare at a camera in a room by yourself and sometimes those words just disappear or you are trying to get a specific tone, or a truck drives by LOUDLY...any other number of things. Filming is just much harder 😂
@@ErinTalksMoney Soo accurate! But your videos are honestly always so professionally done - it's great!
Given a job scare that I just went through (I retained my job but had to take a pay cut), I would urge anyone who is facing uncertainty at work to have an 18-36 month emergency cash reserve. This is too scary of a situation to throw a Hail Mary pass (i.e. load your 401k) when you don’t know what’s coming.
The more the market falls the higher I contribute to the 401K.
It was 250/biweekly before 2019, 500 during the 2020-2021 and 1100 now.
Currently I have 2 years worth of cash on hand. I am six months into my retirement at this time. Dividends/interest currently cover about 90% of my monthly withdrawal so as long as the dividends don't get cut, the reduction in account value during the first half of this year is not a huge deal long term. As always I thought your content was spot on in the video.
Thanks so much!
I am 22 years into my retirement. I haven't touched my savings or investments. I never earned more than 50K in my life, but worked overseas so I get to save most of my pay. My pension and SS is enough to cover my expenses.
Yes a rough market.
Yes this too shall pass
You younger folks will repeat this many more times .
Eventually one develops a stomach for it.
I agree 100%! After 2020 shut downs we kept investing & started putting money back- 2 years later- the stock market & inflation doesn't bother me as I know I can afford whatever happens. Sadly those that live paycheck to paycheck that didn't change their ways after 2020 will pay dearly & feel this the worst!
I'm not at all worried by the drop in the stock market. I'm very upset by the inflation.
I'm with you!
Congrats on 20K subscribers Erin … Keep up the good work .
Thank you for the great content, out takes included! 😄
I appreciate your bold and definitive stance on holding cash at this time. I watch multiple finance channels, and they all are recommending the same thing. I have peace of mind because of my 6 month emergency fund and feel confident maintaining my dollar cost averaging strategy through this volatility because the market has always rebounded.
My wife and I have the same tension. I want to invest everything and she wants to hold onto a lot of cash and it kills me, lol. We are a two income family and are holding over 6 months of cash in out emergency fund. I would rather be at two or three but my wife is right that it does bring a sense of security having that cash available. Anyways, good video!
I just spent 15 months ( up to end of February 2023) living from such savings before collecting my first german state pension (social security if you're an American).
Having enough savings, plus having a small life insurance pay out, I sailed through.
In the last few months, a company pension is taking longer to start being paid, and I just had to unexpectedly replace my washing machine and I'm still not losing any sleep.
Having enough cash saved means not worrying and definitely helped me ride out market volatility, my stock portfolio is still down, but will recover.
Have a nice day everyone.
Like many an investor, I've deployed available cash in attempts to time the market, and got that wrong as often as right when buying the dip with certain stocks and ETFs. So now I remain fully invested where the portion of my available capital allocated to retirement is concerned, and contribute to my accounts on a dollar cost average basis timed to my biweekly pay. That said, saving cash to an emergency fund available for crises unrelated to investing is financial common sense for the reasons you cite. The emotional comfort you gain from knowing you've enough cash to survive a crisis is priceless. In this way, you're investing in your own or family's welfare and general resilience when met with a job loss, a major medical issue or house repair, etc.
I am a huge fan of dollar cost averaging - investing no matter what the climate. (and having enough emergency reserves to help me sleep at night) 😊
I have gone through >80% drops multiple times with my bitcoin. can still sleep without any cardiovascular issue and fully confident it'll always go back up like s&p 500. (can't say for all other coins though)
Yes, I agree cash is king for now.
sounds like your portfolio passes the pillow test!!
Hi Erin. Solid good advice from you young lady as usual. I keep about 1 year’s worth of salary in cash reserves. It may be a lot but I am a little bit closer to retirement now than you and I am pretty cautious as well. Have a great week!
Have a great week Tim! 😊
I have a stash of 1 years take home wages. Took me 20 years to do it, but I am glad I did.
Wow!! Congrats 👏👏
@@ErinTalksMoney Thanks. Now its just annual top-ups as my wage increases.
I am here just for the outtakes. The whole video could just be an outtakes So funny when you see her getting so mad. Also she tried very hard to put together a nice video. Nice job Erin we noticed your extra efforts
Another great video. Love the notion of the pillow test. As a retired person not overly worrying about money is priceless
Bear market is perfect time to put money in cause everything is on sale so you are getting everything on sale.
Totally concur. In a downturn is a great time to add more to 401k or other investments. It's a terrible idea to reduce investments as much of the market's return will happen as we exit the bear market
@@jayhimes5016 I agree. When you put money into the bear market it will help you recover faster once it turns around. Since you are buying more share during the bear market it will also help you make more dividends and it will help you buy more share.
Absolutely! I always have a pool of money to put into index funds when everyone is pessimistic. Best buys that I have ever snagged every time.
@@jayhimes5016 people still insist they can time the market lol
@@billsmafia2453 You can't perfectly time the market but that wasn't so much my point as trying to say that now is the time! Pedal to the metal on buying beaten down quality stocks that are on sale!
Financial Education is so important. Thank you for the videos.
It really is!!
I have a taxable brokerage account as a middle ground between cash and retirement accounts, and I am in the process of selling to boost cash. In reviewing my investments I realized it's time to sell.
Nice video and good advice. 3 to 6 months of living expense is about right for an emergency fund. I keep a little over 6 months and I also try to keep more of that emergency fund into higher paying interest accounts. With rate as high as they are now days, it's pretty easy to find savings accounts that pay 1% or more. Not a lot but better than the .01% a lot of banks pay. Nice video again Erin and I like the bloopers at the end, funny.😆
Thanks! 😊
The timing of this is impeccable, Erin!
Thanks! 🙏
Good Stuff. I especially liked that you took the emergency fund into retirement. I am not passing the pillow test at this point so the emergency fund is going up. Thanks for the advice.
Hi Erin, great video and great advice! I too have about a 6 month emergency fund. And as you put it, that will make me sleep better at night knowing i have that money available if I need it. You would make a great psychologist. A sweet voice and you know how to calm people down and remind them that investing in the market, and/or a 401k is a long term investment. Loving your outtakes and your facial expressions are priceless🤪 And I looks like you could have some great dance moves 💃
Have a blessed day! 😊
P.S. I bet all that construction will increase the value of your house 😁 Which is another great way to put your money to work😊
We are also finishing our basement - adding a bathroom, bedroom and living room - so there is a fair amount of construction happening in our house 😂 and that's the goal - to increase the value of the home when we need to sell in a handful of years. (PS I broke my index finger carrying the shower about 4 weeks ago - I just take my wraps off to film 😂 )
@@ErinTalksMoney I’m soo sorry to hear you broke your index finger. Ouch! 😞 that must’ve hurt like crazy! Sending a hug 🤗
Two of my friends and I bought a flipper house a few years ago and the basement was just four walls, so we built a master bedroom with a master bathroom tub and shower, a walk-in closet, a living room and a laundry room. And remodeled the kitchen, put in brand new windows though out, re-did the floors and took off the old roof shingles but had a roofing company put the new roof on, so we could sell the house with a warranty for the roof. And did the landscaping. Bought it for $168K put $25K into it. Did all the labor ourselves except for the roof. And it sold in 3 days for $270K
OMG....I'm loving the out takes section! so funny and real :)
Thanks Val! 🙏
I am all in cash since beginning of 2020 and great move financially for me!😁👍
Why is that a great move?
Okay I love these videos. I’m saving up my emergency fund. It’s slow going. But slow and steady wins the race eventually!
Slow and steady definitely wins the race!!! I hope you have a great week Abby! 😊
Having an emergency fund makes me feel so at peace no matter what’s happening in the market or everyday life.
@@juangalvan8873 I’m getting there! My problem is I keep putting money into my Roth IRA! I need to keep my eyes on the prize!
Like your dance moves And face expressions…
Great information….
Keep sharing your knowledge and beautiful humor…
I've always had lots of cash. Right now it is up to 40% of my stash, but only because of lower values of my equities. I expect my equity positions to slowly rise and my cash/bond positions to go down as the markets recover. My spend rate is very low in retirement. Before retirement, my savings rate was high.
Sounds like you are well prepared!
Another awesome video. I agree with your advice and perspective. You articulate very well and present in a genuine and sincere manner.
Thanks so much Sandy!! 🙏
Hi Erin-Really enjoy these videos. Very informative.
Thanks so much!
Great advice. Thank you!
You are so welcome!
I personaly believe that cash reserves and emergency funds are useful only in 2 cases:
- for peace of mind (which personally doesn't apply to me, i have piece of mind knowing that i am following the optimal strategy, ignoring irrational fears)
- if you will need some money in a mid-near future, and you dont have enough in liquid investment to be able to use that in case of a big market drop
If you have a very large liquid investment, then you do not need a cash reserve, because worst case scenario, you will just sell your investments at a loss and use that money.. that is a risk that you will always have when investing, so it doesn't matter if its a short term or a long term risk.. the risk is always there
if i dont touch that money, but then there is a market downturn when i go to pension, that's the same issue.. i dont fix the issue just by keeping cash reserves, i just push it back to retirement... which is not necessarily a good thing
I only keep about 5k in cash for my day-to-day spending, everything else is invested in liquit ETFs (and some not-so-liquid pension funds), as long as one can sleep well at night with this arrangement, i believe is the best one
Excellent bloopers! Thanks for the video! :)
Glad you enjoyed it! 😊
I have about a month of emergency savings.. definitely need to save some more!
Almost a perfect explanation of having cash. A retiree should have 4 yrs of expenses. Study the period from 10/'07 to about 10/'11
I think people also need to factor in their "income levels" (for lack of a better term.)
As an example, a family making $40K is going to be hit harder by a setback than a family making $200K.
Yes, high earners can be in for trouble if they lose a job with no savings, because they tend to have higher expenses. But low earners tend to be exposed to a larger number of more impactful expenses than just job loss. For example, an unexpected water heater replacement can really hit a low income family hard, whereas it is merely a nuisance to a higher income family.
Great point!
True. There are some costs that are the same across income levels - a fine is the same $ amount, no matter your income - but there is a bit of scaling with the value of your assets and your peer group. Our household is on the ‘poor’ side for income in our area, but we also have one reliable car not two to gas up and insure. We have a cheap house - and never had enough income to qualify for an expensive one. Our kids are homeschooled instead of expensive private school, and so their homeschooled peers (from other single income households) have cheap/free expectations for activities and toys. We also have spent a long time paranoid that the money is not there to cover debt so we avoid any ‘optimistic’ debts that people get into when they have a lot of wiggle room to cover expenses. In the end I think burn rate and income tend to scale pretty closely. And when you are poorer you get the bonus that no one - the government or peers - expect anything from you.
I've been putting money in ibonds for 3 years, and will do so next year. This accounts for about 75% of my emergency fund.
Emergency fund is important, but so is the ability to have timely delivery of that fund, which an emergency usually requires. Some people may not accept cash, or wire, or even personal checks. Some may accept certain credit cards but not others. If you pay by CC, you have to make sure its credit line is enough to cover it. In short, you need adequate **payment methods** at your disposal so you can pay. For instance, posting bail and funeral services usually don't accept personal checks, so having just a bank account is no good.
I had to get out-am retired and OLD; don’t have that time to recover
You have to do what helps you sleep at night - that's the psychological aspect of money
Presently have 3.5 months of take home pay in savings. Retiring in 15 months or so. Hoping to have 6 months take home by then.
And on topic. I love dollar cost averaging and it’s currently what I’m doing in my portfolio. I class my physical Precious metals as my emergency fund as well as wealth preservation. They are also easy to liquidate. With no loss of purchasing power, such as fiat currency.
Also beware! Holding cash in the bank , even though fdic approved. Is not safe. It’s called a bank “bail in”. I believe this is where it’s headed. So be careful.
Just my two cents lol
I appreciate your two cents! The subject of bank bail-ins seem to slowly making a few headlines - and they were very much a reality in Cyprus...so, who knows...
@@ErinTalksMoney yes definitely! Look at what happened in Canada with frozen bank accounts (under the terrorism act lol), also it’s happening in a province in china, where everyone has lost all their money as the bank done it.
Just always best to be cautious and keep your ear to the ground lol.
I dont like banks for the same reason, ours is in Credit Unions and I'm not sure if they would be any more safer.
@@duanecox9327 I just recently read, that the fdic only holds 2 cents on every dollar. AsWell as they have different thresholds on payouts etc. so I would err on the side of caution. Remember physical gold and silver coins or bars, maintain wealth and are also easy to liquidate. And hold no counter party risk.
@@mint-tedpreciousmetals7735 yes I'm in full agreement with you.
I just found your channel on youtube i watched this video and the one on 401k balance by age and learned so much i didn't know thank you for that and im definitely gonna keep interesting and add more to it not less
That's awesome to hear!!! Welcome to the channel! 😊
I need to have at least 100k in the bank to feel safe
Good stuff. Yeah everyone should keep investing for sure. I like to keep a six month emergency fund and my sinking funds in an online high yield savings account. Savings accounts are jumping fast we should be at or over 2% soon, not bad getting 2-3% on your cash reserves that is also very liquid (takes 2 days or less to get to).
💯 💯
Thumbs up if you remember getting 9% on a money market account!
I am seeing a few sites offering 2+% APY now which is nice.
Great advice Erin! Thank you!
Thanks Gina! 🙏
Loving your outtakes at the end 😂💝
Emergency funds should definitely be treated like insurance. What I do is take my emergency fund amount at the beginning of each year, then multiply it by 5%, then divide that number by 12. This is the “premium” I transfer to the account each month to stay ahead of inflation.
Hi Erin! We have about a 3 month emergency fund set aside. I would like more , but took a 50% pay cut last year for my mental health and to get out of retail. We are a 2 income household which helps but have 2 small children and also paying for me to go back to school right now as well. We are still contributing our company match to our 401k right now at 6%, but will bump up all savings amounts once I'm back in a higher paying job and I don't have daycare bills either in a few short years! 🙂 Keep the videos coming, we love them!
Hey Brent! I recently read a book called the Rule of 30 - and it discusses how you can adjust your savings rate over your working years - reducing it when you are facing daycare expenses for example then bumping it up higher during years when you face less expenses, and still come out right on track. It is from a Canadian economist - so not a straightforward application to US and our financial system (like Social Security) but still interesting if you like to read about finance. 😊
@@ErinTalksMoney I do like all things finance so I will take a look at it. Another good thing is my mortgage will be paid off in my late 40s as we did a shorter term so I know I will have time then to really make a dent as needed.
Quote " I have full faith in banking system" 2008 ?Victory for me ! Just saying! Good stuff though
Three months for me. Probably a little light but I figure it’s a insurance policy that doesn’t cost me anything and makes a really low Remind of interest
If that's where you feel comfortable, then that works for you! 😊
Lucky I'm all in on AMC and some other stocks;) Green or red
great video. I really like the content. The point proven winning moment was so funny - it was relatable because I work for government too. maybe I need emergency fund.
I think a year's worth of expenses is okay but a year's gross salary is great. I'm in the "pay off your house early" camp so I hope to be doing that soon. Afterwards I'll start saving for another one and make the one I'm in into a rental.
Cypriots and Greeks would probably disagree with you about keeping money in guaranteed, insured banks. I try to have a year's worth of "cash" that I set aside for the following year. I sell stock in November / December to optimize my taxes (gains vs. losses), then I buy throughout the year. I always keep assets at least one year to avoid short-term capital gains.
Ha! Thanks for sharing your bloopers. I’m here thinking you’re so perfect in your presentation. You’re intelligent and funny, too. 😊🤗
Erin this may not be the correct show but you talked about you an your husband eating beans ionstead of stake. I love bush beans I am just wonder what you eat with the beans to "make a meal" Thank you
No mortgage or car payment here, just depending on military retirement and SS pay each month. Should I be concerned? Thanks.
Man, I wish I could clone you. You are wonderful. long-time follower. keep up the great work!
Thanks!!
When it pains you the most is when you should be investing. The rule is simple buy low and sell high. That never changes.
Over the years if I would have just put my money in my account and forgot about it, I would have done much better. I have a decent nest egg and had to retire recently at 55 due to some health issues. I have a decent pension and no bills so I am not starving. I may go back to work next year more out of something to do instead of needing money. One thing, I always hear you mention. 401k, 403b, Roth but I have never heard you mention 457 accounts which is what I have lol. Take care
...I will have to talk about the 457 at some point haha 😊
When I was young and dumb and poor I was pretty happy. Now that I'm old and smart and have lots of money laying around I can't sleep at night worried about losing and protecting all that money.
Took like multiple days to make this vid? LOL I'm just here for the bloopers
Just to let you know, I couldn’t hear the airplanes or the construction on the video outtakes.
well that's good!! I've had videos where I just powered through thinking, "no one will hear this" - but then inevitably I get a handful of comments saying, "what was that noise in the background" 😂
Would you recommend something like a CD or I-bonds for your emergency savings that way it's doing a bit better than a savings account? For your question, I keep about 6 months as well. I had a year but my advisor backed me down to 6 months. I'm retiring early in the next year or two so may be jumping that up to about 3 years but I'm easily talked out of that stuff so we'll see.
I currently use a mix of I-Bonds and a money market account. I think CDs are great as well. I-Bonds and CDs can have limited periods where that money isn't accessible - but after that window - there is just a loss of interest, but the money is accessible. So just make sure you can access funds when you need them 😊 good luck on your retirement, it's so close!!
Lol at that emergency fund victory dance! 😂
😂 (my hubby might like it less when he sees it haha)
I believe that pay can be held for a couple of months for no reason while in the US military. An emergency fund is really nice during a PCS as payments are generally reimbursements, or if there is an increase in the number of dependents. Granted I believe there is Airmen & Family Support Center or Air Force Aid Society that can help out with issues.
As it stands, I have an emergency fund that fluctuates between 25% and 50% of my yearly income. I generally save cash until I find something to invest in, and then dip into the emergency fund to invest up half of my emergency fund. If I get to about 50% and haven't found anything worth pursuing, then I move enough over into a brokerage account to bring me back down to about 50%.
My situation allows me to only really need 3 months of an emergency fund. I have insurance that will cover most anything major that could happen, and if I ever find myself in a situation where I lose my job and can't find another in that time, I think there would be bigger problems to worry about; like the US no longer exists problems. So the cash wouldn't be helpful anyways. lol
I have 6-9 months emergency fund always and I keep rotating between banks that pay me bonus within 3 months
Hi Erin, ...new to channel, love your advice. What you you think of I-bonds or mutual funds? Working on retiring in the next 2yrs. Emergency fund of 6 months. Need some advice, thxs!!
Erin, can you do a video on how much a military retirement is worth? I cringe when I see someone retire after 10 years of service, giving up on hundreds of thousands of dollars in retirement pension and VA!
Will do! 😊
HahahaHahahahaha I loved the last bit with the bloopers :) Thanks for sharing your knowledge
Why is it that people go out of their way to take advantage of a great sale at the local supermarket, but run the other way when the stock market is having a great sale? Personally, I am stocking up on as many goodies as I can afford and fully expect to reap the rewards down the road.
Erin, be careful, if banks get in trouble they will now do a bail in. They could limit or freeze accounts while they figure out the finances. Congress passed the bail in policy after the 2008 bank crisis.
Whew 😅
I’m only down 19.96% so far this year! Good thing I’m not in a recession! 😉
But seriously though everybody, discipline discipline discipline!
😂 😂
Working on my 10 year emergency fund.
Erin, great video! My wife & I have plenty of cash. I wonder what the formula is for depreciation due to inflation? If you have $100,000 in cash and inflation is 9.1% for a month how much of your cash has disappeared?
I have a 2 year emergency fund for housing costs and food.
The Government needs a bit more than an emergency fund!
The government can print an emergency fund. reducing the value of are money.
I just skip to the bloopers at the end. Just kidding, great video.
Do you have advice for cash reserves while paying off debt? ( Sorry not sure if you mentioned this before!)
I'll have to do a video on this 😊
I have 2 years of living expense in savings I think never know what's going to happen
Thanks again for your insight! I have a pretty good amount in savings right now, but I’m trying to shift some of it to investments given the current state of affairs.
My question for you, and maybe this can be answered in a video: I’m kind of caught in between. My wife and I currently own a condo, but we’re hoping to buy a house in the next 5 years or so and additionally, we expect that we’ll both need new cars in that same time period. I obviously don’t want to have to pull from investments to help pay for these big ticket items, but at the same time it’s frustrating to have to keep building accessible funds because I know it’s losing its value just sitting in a savings account. Do you have any thoughts on how to manage feeling caught in the middle?
Once again, thanks a lot. You have great delivery and well thought out ideas. I’m glad I found your channel.
One year emergency fund in a Money Market . Switching some funds to 4.5% Annuity's soon. Your arms look ripped with that shirt (LOL)
Erin - I have my emergency funds in a mutual fund account, totally separate from my main accounts. Do you suggest moving them into some other more secure account?
Yes. You want cash for an emergency and you will want it quickly at the full amount. Markets can go down as well as up. It would be bad if you need cash for the next six months and the mutual fund was down 20-30 percent. You are not suppose to be growing your emergency fund by investing it. You putting risk into something that was suppose to be insurance for emergency.
@@jjred233 Thanks for the info Erin. Take care!
Excellent thought on keeping X amount of cash on hand when starting a business. When I started mine in 2005, I had X set aside for all start up and 1 year of ongoing start up costs. I also had 2 years of personal expenses set aside. Net net? I had little/no financial stress as the business was starting up.
Invest INVEST then invest some more....lol ...been my approach
In a reflationary recession?! Nope
Erin if you give me some cash I will promise to stash! 😝👍💰💰💰💰💰💰💰💰💰💰
Erin, I certainly agree with your video. What do you think about low commission, high cash value, whole life insurance (infinite banking concept)? Might I suggest you look into it and make a video. I would be really interested in your views.
Sorry but a loss on paper is a loss whether you move it or not. There is no absolute guarantee of any re-growth of those funds. Yes historically based on U.S stock market it comes back but not in the absolute sense is it guaranteed. For those who are overly cautious and are student's of history--- this is always the real fear.