Nov, 2024

Security Bucket As Liquid Funds: Borrow From Emergency Fund?

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When is it okay for you to borrow from emergency fund savings? In short, Rob’s security bucket is in a high interest liquid account, which does not penalize him for making withdrawals. Sometimes, he will borrow small amounts from the fund for short term, small return investments. Of course, his wife Claudia approves each investment opportunity. She usually knows the other principals involved.

Borrow From Emergency Fund For Short Term Investments

During our Inner Circle Community Q&A Time, Joe asked Rob to clarify a facet of his security bucket strategy. Does he invest in a traditional bank for the advantage of liquid cash that is easy to withdraw?

Rob’s answer is yes. He likes the advantage of being able to borrow from emergency fund if needed. Rob invests in high interest accounts, eschewing low return options like CDs that also penalize withdrawals.

Occasionally, Rob will withdraw a small amount for short term financial investments. He only will do this if it is a safe investment with a high return. His wife Claudia also has a say in these money plays. Usually, she has met the folks involved in the investment and can vouch for their character. Soon enough, the cash will return to the emergency fund, with a little interest!

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Nov, 2024

How Much Should I Save In My Emergency Fund Security Bucket?

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What is your emergency fund savings number? How much should you store in your Wealth Security Bucket to *really* be prepared for financial hardship? Rob Rowsell, successful multifamily investor, has the answers. It all comes down to what number you and your family can agree on to fund your lifestyle in the event of a catastrophic emergency, such as job loss, illness, or natural disasters.

Emergency Fund Savings Number – How Much Should I Save?

Hans responded to Rob’s request for questions by asking about the “Security Bucket” concept. What kind of account does Rob recommend, and perhaps more importantly, what is the magic emergency fund savings number?

Rob previously mentioned he has two years of income saved up in his security bucket. What amount do most experts recommend, though? Simply put, Rob says it’s an amount that you and your spouse can agree upon, assuming you are married. Money is a point of contention in most marriages, so you will likely need to compromise. Although he is exaggerating, Rob says three months of income is fine by him, but his wife Claudia wants ten years! Obviously, their two year cushion compromise resulted from some serious haggling.

Many financial advisors recommend saving up six months of income as an emergency fund savings number. Your mileage may vary, depending on your own circumstances and risk factor. For instance, younger investors likely have a lot more runway left in life to take financial risks. Thus, they will have a lot more time to refill their security bucket when disaster strikes. Rob recommends the book “The Psychology of Money” for more in depth reading on saving for potential calamity.