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.