Tuesday 13 June 2017

That's what an Emergency fund is for!

I can empathise the frustrations of youth when they hear "emergency fund".

Often in our haste to reach financial freedom, we take short-cuts by pretending that our Opportunity fund is also our Emergency fund. You become grey.

Which is ironic as when it comes to other financial matters, you count in 2 decimal places and you swear by "SMART" goal setting precision... You are super black and white.

Buying a fire extinguisher and not using it may look like good money down the drain... Let's say I'm glad I have a fire extinguisher lying around that I can use right now!

Someone close to me has a financial emergency right now. Thankfully its not the medical kind!

I'm glad I can chip-in without liquidating my existing investments or dipping into my Opportunity fund.

I have an Emergency fund for a rainy day, and its raining now. So don't have to think twice. I can ACT.

I am reminded of my 5 year old post: Taking Care Of Ourselves First


  1. Who confuse emergency fund with opportunity fund? Quickly buy kopi session to learn

    1. CW,

      Say no use one.

      One has to reach the Yellow river only then tears will drop.

      Sometimes we have to wait for the "crash got sound" moment...

      Wait. How did I get the presence of mind to separate my opportunity fund from my emergency fund?

      No one told me to. And I didn't read it from a book.

      Oh! From our Chinese: 狡兔三窟 :)

  2. i only got emergency fund, no opportunity fund. oh dear, when crash happens, i miss out on getting good deals....
    nmind lar..be happy be healthy..the rest can wait

  3. not sure
    but too old for such market crash excitement ...
    no point lar

    1. Ang gong gong,

      Of course you don't need an "opportunity fund".

      You have your own self-sustaining portfolio where in your own words:

      "Market up or down doesn't matter too much, in fact is not a bad thing after all. Dividends provided new cash flow as compounding and dollar cost average tool."

      I'm more a market-timer and "wind catcher". 2nd rate at that :(

  4. Shhh.....that sounds like me. LOL!

    Nvm, recently I took profit off table and beefed up my emergency fund further. In such uncertain economic times, it's not good to live dangerously.

    1. Unintelligent Nerd,

      That art of taking money off the table will get easier once we have enough practice ;)

      Let's hope the next one will not turn out like the 97 Asian Financial Crisis...

    2. Smol, I can understand those who take emergency fund like opp fund. I am one of them

      The fustration is I cannot grow through savings perhaps due to high expenses. My Saving rate is like "kena sai" and I wanted the portfolio to help in savings.

      And then reading all the portfolio size makes me want to beef up the size very quickly. Those much younger already has bigger port, where got time!

      It's when my mum gets sick then I realize my port is not my port anyway. Had to liquidate it to pay this pay that. But because I exited. I manage o get back at lower price.

      Makes me understand my emergency fund need to grow. My opp fund need a sizeable cash level. And I need to continue to earn more

    3. Sillyinvestor,

      Thanks for sharing your experience.

      Confucius was right; we learn from bitter experiences...

      I've been there myself during my early days of investing.

      At first invest a bit to try try. Eh? Make money. So add and add until its cash all in.

      Still make money!? What's next? Margin account of course! Look mom! I am making all these money!

      Then the dot.com 2000 came and taught me what's risk management. And do not confuse making money in a bull market with skill and competence :(

      As part of my journey to "recovery", it dawned on me that "diversification" in 100 stocks does not mean much if all my liquide cash is 100% vested in equities...

      So although my equity portfolio may look "concentrated" with only 6 positions, I'm really a jack-of-all-trades with positions in other asset classes.

      And one of the stablizer is cash in an emergency fund that is not dependent and ring-fenced from the swings of the markets.

      In financial freedom, there's a split between those who focus on EARN more and those who focus on SAVE more.

      We can learn something from the SAVE more camp when it comes to not succumbing to lifestyle inflation to keep up with the noveau riche...

      If we look hard enough, there will be investors who have more money than us, younger than us, and have returns (in % and in $) that beat us to a pulp!

      Why do I need to benchmark myself with them? To try and keep up or copy them?

      I am not selling subcriptions, managing money, or marketing seminars, or have a goal to dethrone the bleeding heart (I like him; he's weird in a nice way) as the no.1 financial blogger in Singapore...

      I'm just a man-whore; I as shallow as piss on the sidewalk.

      That's one way to poke fun at my ego ;)

  5. Hi SMOL,

    When I read your response to SI, I became quite concerned. Heng, I ownself know ownself; I don't play with margin. Not my cup of tea.

    When you speak of AFC, I only have "textbook" knowledge of the event. Textbook knowledge explains, to some extent, why you have bei kambings going all-in now. They think they can handle it though they have yet to experience it. I find it quite unnerving when all the lao jiaos are sitting on the sidelines ominously.

    I'm still in the process of liquidating my portfolio; can't wait to get my hands on good reits that "never" trade below book value. When it happens, I'm sure I'll rub my eyes to confirm that my eyesight is A-OK. I still think I'll be genuinely surprised even though I'm mentally prepped for that.

    1. Unintelligent Nerd,

      I wasn't into stock speculation in 97 Asian Financial Crisis too. I started only in 1999.

      But during 97, I remember the impact on the real economy was more severe than in 2007 GFC...

      1. New graduates took up to 2 years to find a "proper" job.

      2. Mid-career professionals retrenched and could not get back their old jobs. Have to retrain and start in new industries all over again. Press reset button.

      3. Some joined MOE as teachers due to "no choice". Of course they leave once economy back to normal.

      4. Quite a lot of businesses failed. But then, some brave souls took the plunge into business despite the dark clouds as business costs were much lower in a recession!

      An emergency fund that can last us 2 years of living expenses may sound extreme; its not if you can find older cousins and colleagues who had experienced what's it like to not have a job for 2 years...

      From age 21 to 24, I was a serial job hopper and bum. Longest job held was 18 momths, shortest stinct was 1/2 day. With lots of "gaps" in between.

      It wasn't recession or anything. It's just that I've no clue what I wanted to do with my life.

      That's where I discovered "crash got sound" ;)

  6. temperament,

    Exactly. That's why I gave you a "wink" when you shared how much of your networth you invested in stocks.

    We all have our own vehicles and methods ;)

  7. sometimes we can plan all we want to plan, but unexpected things beyond our wildest imagination may still happen.

    We can have all our emergency and be calculative in this and that, but when like SI says what if loved ones were sick and need E or even ur opportunity funds?

    Then u decide to keep ur e or opp funds and grow to satisfy our own self desire or to use it all for our close ones?

    Sometimes even many famous rich people that for decades only until the last few moments of their lives do they realize what is truly priority in their life, which they never focus on when they are alive, and at last it is too late.

    And if we keep focusing ourself the more we fall into that trap.

    Use ur E-fund or excess time go do some social work maybe for those who need more help, maybe outside sg even?

  8. and I truly learn one thing that the more we want our fund to grow, the more unexpected things happen to negate that growth beyond ur wildest dream in the long run.

    The more relax and peaceful and more willing to let go, the more the abundance and no-lacking beyond ur understanding can come.

    1. Rolf,

      Ah! I read that before...

      Sell your possessions and come follow me...

      Its interesting your version of letting go has an expectation of "abundance and returns"...

      My "oriental" version of letting go is non-attachment ;)

  9. Rolf,

    I'm not a bleeding heart.

    Close ones matter more than others.

    I'm not one of those "samaritans" who volunteer at old folks homes but own parents seldom see.

    I stand tall and strong for my close ones who need help financially in their times of need. I can't do it if my funds were "depleted" due to my "generosity" to strangers.

    I am single; it does not mean I have no dependants ;)

    That said, I am very conscious that I should live the life that I want - not what others expect of me ;)

    Yup, I'm narcisstic and super egoistic too!


  10. temperament,


    I bow to the holiness in you :)

  11. temperament,

    All the more I prostrate to your common sense ;)

    Besides faith, in this arena of speculation/investing/trading, if one abandons common sense, one may come to a lot of grief...


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