|
Zeta Taskforce posted:It’s probably just me and I’m sure you have lots of wonderful qualities, but OMG. You want a prenup because you want to protect your future capital gains? I don't see the problem with this? They are both coming into it with their own assets prior to getting married. Why should either party be entitled to any of that in the case of a divorce?
|
#
?
Jun 13, 2012 18:37
|
|
|
|
| # ? May 5, 2024 03:03 |
|
|
asmallrabbit posted:I don't see the problem with this? They are both coming into it with their own assets prior to getting married. Why should either party be entitled to any of that in the case of a divorce? It's an emotional thing. I'm with Zeta. From a financial point of view, it kind of makes sense, especially if they never plan to have assets in common like a house or a car, or big long term expenses like children and their college educations. As long as they're happy to live as roommates, financially speaking, then it works. I used to think this way was a good way, and I more or less do still- for people who are dating. I think people should go into marriage intending for it to last a lifetime. It'd be really weird if they kept their earnings separate while married. Also, I begin to wonder how long this goes on. When they're old and start needing to draw on the long term savings, what, will they just draw an equal amount from their respective funds? What if she runs out of money before he does? It's just weird and feels off to me. Different strokes. I think maybe I read it wrong at first though. It's only the premarital assets that are separate, yes? And the gains on those? Any money earned during the marriage will presumably be shared...? Wow, okay, so you do have things well squared away. I thought maybe the 200kish was just hanging out and you had no organization at all. I totally understand your hesitation about investing in stocks & bonds, particularly after 2008-9. The thing is, there's not really another option at the moment. You can (a) let your money sit in a low interest account and accrue less value than it loses due to inflation, (b) invest in metals or oil and hope they keep going up instead of crashing, or in real estate or something, but that's super not liquid, or (c) stocks and bonds. A is fine, but over time you will be losing value. Putting your money in a savings account is not something you do because you think "Man, I have enough money. I think I'd like to let inflation make me poorer." B is I don't even know but I wouldn't touch it. Someone else can weigh in on that sort of thing. C is what most people do. The reason most people do it this way is because it makes the most sense long term.* You can balance your portfolio (what bonds and stocks you hold) to minimize risk. If your assets are diversified enough (both stocks and bonds, spread over a variety of industries, perhaps both domestic and international), you probably won't get totally hosed or incredibly in the dips and leaps of the market, but you'll do okay. As you get older and close to retirement, you move more of your money into lower risk investment vehicles (and maybe by the time we're nearing retirement the fed will have raised the interest rate  ). Most brokerage firms offer funds that are specifically designed to do this. I have investments in the Vanguard Target Retirement 2050 fund, the Vanguard Total Stock Market Fund, and then some short term bonds. What happened in 2008 to a lot of people is that they were older and nearing retirement or were in retirement, and still had a lot of their assets in riskier vehicles like stocks rather than in things like CDs or bonds, and they lost a huge amount of value in the crash. The value of their homes- the biggest single asset most people have- also crashed, leaving many people with enormous, unpayable mortgages. Unemployment followed. And the cherry on the poo poo sundae is that for those older folks whose money was safely tucked away in CDs and gaining interest nicely... well, nice interest CDs are gone now, because the Fed lowered the interest rate to near 0 rates in order to make credit more available. Lots of decent reasonable decisions but they combined really, really poorly for people who were going to retire soon. For young'uns like us (I'm assuming you're in your 20s or 30s), there's still time to recover, and at our age it makes sense to try to gain more through slightly riskier investment than to keep it all holed up essentially under our mattresses. SOOO if I've convinced you, how should you set up a retirement account? I don't know because I doubt I'll see that amount of money in my life anytime soon, geez. I suggested a Roth IRA because of their particular tax benefits (and I'd still suggest doing one if you have enough "earned income" [W-2 money] even though it's only $5000/year, that's still going to get you a lot of nice lovely untaxed money for when you're old). A normal IRA is another option, or if you do do the self-employed thing, that individual 401k sounded pretty great. You should: Talk to the financial planner about what would be the best way to deal with a dedicated retirement account for sure, amongst all your other discussions. For the other money, the best way to make it work for you will probably end up being in the market as well, but you can go quite conservative. If the financial planner works for a brokerage firm, run run run away. You need an impartial person who doesn't get commissions for getting you to invest in the firm's own funds regardless of what's best for you  Look for a fee-only certified financial planner who is only answerable to YOU for his business.* The number that gets thrown around is 7%. Over a long period, you should be able to get around 7% return on your money in the stock market. Of course, caveat: past performance does not guarantee future performance. Everything could go to poo poo again, yeah. Eggplant Wizard fucked around with this message at 17:01 on Jun 15, 2012 |
|
#
?
Jun 13, 2012 19:21
|
|
|
Zeta Taskforce posted:Rates are so low on any term CD I don’t get the point of a ladder. It sort of made sense when money markets were 1.5% and long term CD’s 5%. To me a long term CD you get the worst of both worlds. You get low rates AND your money is tied up, and as an added bonus you get to lock those low rates in for a long time. The point of a ladder is to ensure the best possible interest rate averaged over an extended period of time. If we are entering a Japan-like phase of essentially zero economic growth and a decade of 0% interest rates, well, his laddered CD of 2.75% all of a sudden doesn't look so bad.
|
|
#
?
Jun 13, 2012 19:24
|
|
|
If your biggest financial problem is that you can't take advantage of the rising interest rates with 1/5th of your savings, you're in really good shape. Plus, if you expect interest rates to go up in the next 5 years, you'll be renewing 4/5ths of your ladder as that happens. It might not be the best strategy to get an immediate return, but it balances out over time and has got to be better than a savings account.
|
|
#
?
Jun 13, 2012 20:11
|
|
|
Eggplant Wizard posted:I used to think this way was a good way, and I more or less do still- for people who are dating. I think people should go into marriage intending for it to last a lifetime. It'd be really weird if they kept their earnings separate while married. Also, I begin to wonder how long this goes on. When they're old and start needing to draw on the long term savings, what, will they just draw an equal amount from their respective funds? What if she runs out of money before he does? It's just weird and feels off to me. Different strokes. The way I see it, for a couple that both work and aren't at the poverty line that guy's method lets them both spend their discretionary income and pursue their individual financial strategies without having major arguments over money, or building resentment over investment decisions that go bad/could've been better in hindsight. Community goods are trivial to split down the middle when both parties could afford to live independently, and you have to discuss and agree on those anyway. If one partner can't afford something you either A) live without it/find a cheaper alternative or B) willingly pony up the extra to make it happen (understanding that it's still a 50/50 ownership). But luxury spending or financial decisions with long-term results are way harder to keep fair, and a lot of otherwise perfectly compatible couples might be vastly different consumers. I've a similar arrangement, and on the small scale I like not getting mad when my partner comes home with clothes she doesn't really need, and I know she likes not having to run every personal purchase past my stingy rear end. It's spared us hundreds of needless fights over the years. Besides it's not like we can't pool it later, or wouldn't carry one another in times of real need. But if her retirement ran out and she needed me to support her, then the spending would be on my terms, and vise versa. It's just that we're never going to see eye to eye financially so instead of a democracy we have two totalitarian experiments running, each happily living within the constraints of our own financial systems.
|
|
#
?
Jun 13, 2012 21:24
|
|
|
lostleaf posted:Not sure this is the correct thread to ask this question or I should be asking in the engagement megathread. I wanted to do exactly this a few years ago (in AZ) but ended up not. First, most pre-nups have to have clearly defined sets of assets, so unless your wealth is tied up in the family business you'll spend significant resources updating the document over the years. Second, they fall apart very easily under litigation. You're basically paying a lawyer gobs of money to write up a contract to protect you from crazy that'll only work if they're sane in a divorce. Unfortunately, the Massey pre-nup is fiction as far as I know.
|
|
#
?
Jun 14, 2012 01:36
|
|
|
Thanks for even more input guys. I appreciate it. The fiancee is actually rather fond of this idea as well. I asked for a prenup literally the next sentence after asking her to marry me. Quite the romantic right? She didn't even blink an eye before saying yes to both.  She didn't view it as an insult. She saw it as sound financial advice. And that's partly why I'm marrying her.You guys gave me something to think about how easily the current plan would fall apart under litigation. Instead of keeping marital earning separate and funding to a joint account, We should combine all earnings. Keeping marital earnings separate would be too easy for any lawyer to imply community property; so why bother. However, if the premarital accounts remain completely separate from marital accounts(no intermixing of funds), it will be much more difficult for the capital gains from premarital accounts to be viewed as community property. We both like the idea of sunset clause that kicks in 10-15 years into the marriage.
|
|
#
?
Jun 14, 2012 04:25
|
|
|
lostleaf posted:Thanks for even more input guys. I appreciate it. The fiancee is actually rather fond of this idea as well. I asked for a prenup literally the next sentence after asking her to marry me. Quite the romantic right? She didn't even blink an eye before saying yes to both. file this under "people different from me". Then again, I have a couple of thousand bucks in "community property", most of which is books and a laptop.
|
|
#
?
Jun 14, 2012 15:45
|
|
|
(Apologies if this has already been covered in this thread.) I am 18 and living at home, working a part-time job. I would really like to be able to move out of my mom's house by next summer. I have two older sisters who have moved out, so I asked them for financial advice. On top of telling me to save up more money than I think I'll need, my oldest sister advised me to get a credit card to start building good credit. So, I have some basic questions: 1) I bank at a credit union. Can I get a credit card through them? Does this vary from bank to bank? 2) Can you tell me about your first credit card, and/or do you have any pointers about which credit cards are good starting points? 3) How long does it take to build good credit? If I got a credit card now and wanted to apply for an apartment in a year, would I have accumulated enough credit for the landlord to tell anything from it? 4) Are there any other ways that I can build good credit? I know that loans are one way, but will my bank approve an 18-year-old kid with a part time job for a loan? 5) I have heard a lot of credit card horror stories. What do people do wrong to get into deep poo poo with their credit card companies? What can I do to avoid getting hosed over? Thanks goons, you guys are great.
|
|
#
?
Jun 14, 2012 19:17
|
|
|
Budget Bears posted:5) I have heard a lot of credit card horror stories. What do people do wrong to get into deep poo poo with their credit card companies? What can I do to avoid getting hosed over? Don't buy things on credit that you couldn't pay cash for, and pay off your balance in full every billing cycle. If you do these 2 things, you will never get into trouble.
|
|
#
?
Jun 14, 2012 20:01
|
|
|
Guinness posted:Don't buy things on credit that you couldn't pay cash for, and pay off your balance in full every billing cycle. If you do these 2 things, you will never get into trouble. Is that seriously it?! Why do I hear so much about people getting into trouble with their credit cards? Do they really have a hard time doing these two things?
|
|
#
?
Jun 14, 2012 21:10
|
|
|
Budget Bears posted:Is that seriously it?! Why do I hear so much about people getting into trouble with their credit cards? Do they really have a hard time doing these two things? Because people forget how much interest really costs them when they buy things, and figure that they can just pay it off later. Some consider credit cards "free money" and ignore the fact that they'll have to pay that money back one day.
|
|
#
?
Jun 14, 2012 21:18
|
|
|
Great stuff thanks again! I have an appointment with a guy in 2 weeks and I will go from there.
|
|
#
?
Jun 14, 2012 21:22
|
|
|
It's a subtly snowballing thing, I know I came out of high-school with good old fashioned "save up for it if you want it" ethics. Then you charge something you need but can't afford at the moment like a plane ticket home for a funeral or a car repair, and if you have a decent APR (which noone really does anymore) you realize it's painless to slowly pay it down. Bit by bit your credit limit becomes your emergency fund, and your threshold for emergencies gets lower as you realize it's painless (read: death by a thousand cuts) to carry a balance. Most people with any sense don't start out charging luxuries they can't afford, but if your income's not technically able to cope with the levels of emergencies/unplanned expenses you have, a credit card can mask that fact for some time and it gradually worsens as you become accustomed to that 3-figure balance.
|
|
#
?
Jun 14, 2012 21:25
|
|
|
You might have to do a secure card first or something. The main thing I'd focus on is whether or not you could actually live alone with your part time job. Even living with a roommate it would be rough in most cities I'd imagine, unless it pays somewhat well.
|
|
#
?
Jun 14, 2012 21:25
|
|
|
Budget Bears posted:Is that seriously it?! Why do I hear so much about people getting into trouble with their credit cards? Do they really have a hard time doing these two things? The other part with credit cards is just how easy it becomes to spend money and how out of sight it is. When you are spending cash you physically see the money dissapearing from your wallet/purse. It's all too easy with credit cards to underestimate just how much you've been spending until you get the bill later on if you don't keep track of it. Stuff adds up really fast, you forget purchases you've made until they show up later etc. I'm consistently amazed at just how much shows up on my credit card even though I closely monitor it and use it for everything. When you go to buy something, your card is just there and you might not think about the total that much. I personally check my balance at least once a week and pay it off so it stays relatively up to date. asmallrabbit fucked around with this message at 21:38 on Jun 14, 2012 |
|
#
?
Jun 14, 2012 21:36
|
|
|
I think most people who end up in trouble with credit cards start out responsible but then hit on hard times. Instead of scaling back their lifestyle like they probably should be doing, they assume it will be temporary, and figure they can just float a few hundred bucks here or there until they're back on their feet. Sometimes this is fine, but other times things don't go as planned and before they know it they've maxed out all their cards. It can be sneakier than that, too. You may be doing just fine, paying down your card every month and making all your ends meet, but suddenly your TV breaks and you toss $1500 on there to replace it, knowing you'll be able to pay it off in 3-4 months. Then the next month, your car breaks down and you have to put another $1000 on there to repair it. At that point, interest starts to snowball and the amount that used to pay it down each month is only just barely covering each month's new interest charges. Of course, situations like this are still easily avoidable if you really follow those basic rules. TV broke and you don't have $1500 cash? Get a used TV from Craigslist to tide you over, or just suck it up and buy that $300 set even though it's "only" 720p and 32".
|
|
#
?
Jun 14, 2012 22:02
|
|
|
Budget Bears posted:(Apologies if this has already been covered in this thread.) Your credit union is a great place to get your first card. To add to what people have said so far, I wouldn’t emphasize credit THAT much. It seems important when you have zero credit, but it isn’t that hard to have good credit and you don’t have to do that much. Get one card, never be late and in only 6 months you will have very good, but not quite excellent credit. If you get school loans, they will go on there too. I live in this world and I know things are easier if you have good credit so I’m not going to preach never borrowing anything, but a credit score isn’t that great of a measure of financial health. To get an apartment, unless you want to live in a really fancy area, all they are checking for is that you have not left a trail of financial destruction behind. The biggest way people get in trouble is when all they look at is the payment and they make decisions only if they can afford the payment. That attitude gets people into a $25,000 car because they can afford $500/mo. It gets people into $20,000 in credit card debt because they can afford the minimum payment. And the human mind can rationalize a lot. Because you got a great rate on the car, you don’t think it cost you that much. Because you got a 0% balance transfer offer, the credit card debt doesn’t matter that much. Plus your career is going to take off and you will be able to out earn your mistakes today. And life is just really expensive and you will always be in debt anyway. It is so much easier to not dig yourself in. If you live on less than you make, create a written budget so you actually have a plan, and if you have savings and an emergency fund to deal with life when it happens, you will be so far ahead. It is my experience that not having an emergency fund makes people desperate, and stupid, broke, and desperate all hang together.
|
|
#
?
Jun 14, 2012 23:13
|
|
|
Harry posted:You might have to do a secure card first or something. Secured cards are good but not all of them (not most of them, even? I think?) report to the credit bureaus, so having one won't do you any good. Better to look for a super low limit one designed for students or something, if you can't get approved for another one. Really, just start with a CC, use it responsibly, and that will be enough. You don't need to go on an all out on trying to get more and more credit through loans or whatever. Start with one CC and use it right and only get more credit as you need it, IMO. This from the girl who got an Amazon card just for points, though, so I may not be being totally unhypocritical here (but I pay them off!). Roommate good idea, especially if in your area landlords do credit checks. Also cheaper. Also they can tell you how to use the laundromat and stuff if you never have.
|
|
#
?
Jun 15, 2012 01:52
|
|
|
Can someone explain to me why a testamentary trust is considered legally "airtight", but other things can be contested in probate during the settling of an estate with a will? Why can the executor of the estate challenge beneficiary designations in a will, but if a trust is involved, the trust is protected from such things? Is the testamentary trust just considered a legal entity which transfers managerial ownership to the trustee/beneficiary upon the trustors death? PRADA SLUT fucked around with this message at 07:38 on Jun 15, 2012 |
|
#
?
Jun 15, 2012 07:35
|
|
|
Fraternite posted:The point of a ladder is to ensure the best possible interest rate averaged over an extended period of time. If we are entering a Japan-like phase of essentially zero economic growth and a decade of 0% interest rates, well, his laddered CD of 2.75% all of a sudden doesn't look so bad. I'd love to know where you're finding 2.75% interest rates.  I haven't seen those in years.SlightlyMadman posted:If your biggest financial problem is that you can't take advantage of the rising interest rates with 1/5th of your savings, you're in really good shape. Plus, if you expect interest rates to go up in the next 5 years, you'll be renewing 4/5ths of your ladder as that happens. It might not be the best strategy to get an immediate return, but it balances out over time and has got to be better than a savings account. False! Here are the current rates from Ing, util recently one of this forum's most recommended high-interest online banks:  My savings account gets 0.80%. That's right, I have to buy a 5-year fixed rate CD to even see a better rate of return than a savings account. So no, a CD can absolutely be worse.
|
|
#
?
Jun 15, 2012 12:20
|
|
|
Budget Bears posted:(Apologies if this has already been covered in this thread.) People have already answered a lot of this but a few things got left out: 1) Yes you can, and it does vary from bank to bank. There is no "one credit card". Look specifically for a card without an annual fee. I think there is a version of the Citi Forward card for college students, but other than that don't expect to get a power rewards card early. Just go vanilla and use it wisely. 2. See above. You may need to get a secured card, but you might also just look for cards that bill themselves as being "for college students" 3 - this is sort of impossible to answer. Basically, if someone looks they want to see good things: no late payments, no crazy amounts of debt, etc. There's not a formula that says "well, he's had 2 cards for 3 years, so he's good". Pay on time, that's about it. 4=Don't do anything with loans. No one will approve you and it won't help you that much/at all. Credit cards are what's called "rotating" credit, and using that wisely is what will be best for you now. 5. People get starry-eyed and see only the minimum payment. It's easy to let your spending get away from you in a month and then wind up not able to pay it off. Don't be that person. Be responsible. That's the whole point.
|
|
#
?
Jun 15, 2012 14:14
|
|
|
Fuschia tude posted:I'd love to know where you're finding 2.75% interest rates. WTF you need to switch banks. The last 5-year CD I purchased from my credit union was 2.2%. Nothing like the 5% I used to get back in the day, but still way better than a savings account. Looks like they're down to 1.75% now, but still at least comes close to inflation, and the minimum is only $500. https://www.secumd.org/html/secu/lower.htm?page=ratescalc.rates_cds I can beat your savings account with an 18-month CD. You really think they're going to raise interest rates in the next 18 months? SlightlyMadman fucked around with this message at 15:31 on Jun 15, 2012 |
|
#
?
Jun 15, 2012 15:25
|
|
|
SlightlyMadman posted:WTF you need to switch banks. The last 5-year CD I purchased from my credit union was 2.2%. Nothing like the 5% I used to get back in the day, but still way better than a savings account. Looks like they're down to 1.8% now, but still at least comes close to inflation, and the minimum is only $1,000. If a CD ladder makes sense to you, then you should do it. My point against it was that I don’t care if you get a 5 year CD for 1%, 1.5% or 2%, you are giving up a lot of liquidity for very little additional yield. The difference between 1% and 2% isnt’ that much. I don’t know if rates will be higher or lower 5 years from now, but I just figure if I have money that I won’t need for 5 years or more, I’m not putting it in something that doesn’t keep up with inflation. I’m putting it in the market where I have a shot at 5%, 7%, 10%.
|
|
#
?
Jun 15, 2012 15:34
|
|
|
Right, my specific point was that a CD ladder makes sense when you don't need that liquidity. The specific situation was a huge chunk of money that's being set aside in case the poster needs to live off it for a long period of time, pulling it out as monthly income. If he sets up the ladder properly, he can cash the money out in intervals. The situation when a savings account would make the most sense is if you might suddenly need a huge bag of money all at once. The market would of course make more sense (especially now), but again with regards to the specific situation the poster said he wanted zero-risk.
|
|
#
?
Jun 15, 2012 15:38
|
|
|
Just opened up an online savings account with Barclay's at 1% APY. I'm looking at putting in a couple hundred dollars a week for a few months to get an emergency fund set up for when I move out of my parents house. My employer has a 401k program, but I know nothing about that stuff. If I sign up and match their contribution, then quit the job a year later, what happens? Not planning on working here long term because it keeps me locked into a rural area, but I'd like some free money.
|
|
#
?
Jun 19, 2012 01:01
|
|
|
Volkerball posted:Just opened up an online savings account with Barclay's at 1% APY. I'm looking at putting in a couple hundred dollars a week for a few months to get an emergency fund set up for when I move out of my parents house. My employer has a 401k program, but I know nothing about that stuff. If I sign up and match their contribution, then quit the job a year later, what happens? Not planning on working here long term because it keeps me locked into a rural area, but I'd like some free money. You can keep everything you put into it after you quit, but they might have a vesting period for their match. After you leave, you can keep the money in the account as long as you want (although they might charge you an annual fee), or you can roll it over into either your new job's plan or an IRA. Even if it's just a small amount, starting up a retirement fund as soon as possible is the best thing you can do for your future self.
|
|
#
?
Jun 19, 2012 01:25
|
|
|
Volkerball posted:Just opened up an online savings account with Barclay's at 1% APY. I'm looking at putting in a couple hundred dollars a week for a few months to get an emergency fund set up for when I move out of my parents house. My employer has a 401k program, but I know nothing about that stuff. If I sign up and match their contribution, then quit the job a year later, what happens? Not planning on working here long term because it keeps me locked into a rural area, but I'd like some free money. You should look into the vesting requirements of their 401(k) program as SlightlyMadman said. It's like either 20% / year for 5 years, 33% / year for 3 years, or a cliff 0% until 3 years of employment. If it's the latter, if you work there for a year you will not receive any of the company match. In the former two you would get 20% or 33% respectively. However, you'll also want to check out their definition for a year of vesting service. Usually it's 1000 hours worked in a plan (usually calendar) year, which means that if you start in June and work full-time you should have 1 year of vesting by the end of December, and will possibly have 2 years of vesting by July 1, 2013. If that's the case and you work that long, you could end up with more of the match staying in your account depending on the schedule. Sophia fucked around with this message at 02:54 on Jun 19, 2012 |
|
#
?
Jun 19, 2012 02:52
|
|
|
Volkerball posted:Just opened up an online savings account with Barclay's at 1% APY. I'm looking at putting in a couple hundred dollars a week for a few months to get an emergency fund set up for when I move out of my parents house. My employer has a 401k program, but I know nothing about that stuff. If I sign up and match their contribution, then quit the job a year later, what happens? Not planning on working here long term because it keeps me locked into a rural area, but I'd like some free money. Even if you are not crazy about the area, I would still sign up for the 401K. Like others said, what you put in you get to keep and getting a tax deduction and having money taken out of your paycheck is a great way to see your retirement savings go up. Also time has a weird way of working in that you say now that you will quit after a year, but a lot of times when people say that, you look at them 3 years later and they are still doing the same thing. Maybe you will meet the love of your life and you won't be so quick to move. Maybe not. But it would suck if you didn't participate and two years later you realized you missed out on the match the entire time.
|
|
#
?
Jun 19, 2012 03:55
|
|
|
How reasonable is it to put part or all of your emergency fund into a low risk bond mutual fund?
|
|
#
?
Jun 20, 2012 01:02
|
|
|
Binary posted:How reasonable is it to put part or all of your emergency fund into a low risk bond mutual fund? Quoting myself from earlier in the thread, with added emphasis. Eggplant Wizard posted:Emergency funds need to be liquid you can get at them in an emergency. If your ohshit money is in a retirement fund, it'll take you at least a couple days or longer to get the money you need. Also, since it IS an investment account, the value is going to fluctuate, sometimes wildly. Over the long term usually you'll come out ahead, but say the economy shits itself again, you lose your job, the stock market crashes... your emergency fund is now halved and you're hosed. So no, don't do that. Savings account interest blows right now but c'est la vie, your emergency fund is not an investment. tldr: Low risk is not no risk, fund is not liquid, it is not reasonable. Now, if you have extra money on top of your emergency fund that you want to do something with, that's a different story.
|
|
#
?
Jun 20, 2012 01:54
|
|
|
The chances of you ever needing all $10,000 (example) within a week is low, I say put half into the bond fund.
|
|
#
?
Jun 20, 2012 02:39
|
|
|
Harry posted:The chances of you ever needing all $10,000 (example) within a week is low, I say put half into the bond fund. I too only keep a few thousand in savings for immediate liquidity needs (plus I always have my credit cards) and the rest of my 'savings' in my bond fund (PTTDX).
|
|
#
?
Jun 20, 2012 03:06
|
|
|
Binary posted:How reasonable is it to put part or all of your emergency fund into a low risk bond mutual fund? I don’t agree with this. To put it in perspective, I don’t think you will be ruined. I understand that a bond fund isn’t the same thing as putting it in Facebook stock. It won’t lose half its value in a month. Also if there is something that requires access to it NOW, you can charge it and then pay yourself back. Many of us use online savings accounts and it’s not like we have instant access either. Also, having a fully funded emergency fund shows responsibility. BUT when I look at what these things are paying, ING is 0.8% and Vanguard’s short term investment grade 1.63%. If you have a $10,000 emergency fund and you invest half of it in this particular bond fund, then we are having this conversation over $40/year. Bond funds can lose money. As you know, the return on a bond fund is a function of its yield and the underlying price. That price moves inverse to rates. As rates drop, the price goes up. When rates increase, the price goes down. The effect is minor (but not negligible) for short term bonds and is huge for longer maturities. But the larger picture is I don’t want you to make your decisions only looking at rate. Yeah, you want to borrow at the lowest rates you can and save at the highest rates you can. But it isn’t the only thing, and sometimes it isn’t a big thing. People’s brains go soft when they see rates. Companies know this and they manipulate us. How many people are beguiled by the zero percent lap top? Or the zero percent car loan. I see perfectly smart people who negotiated a fair price on a late model used car coming off a lease and they apply for a loan at my credit union. We might give them a rate of 3.9%. And nothing happens so we call to follow up and it turns out they spent half again as much money on a brand new car and they thought they did a smart thing because they got 0%. The same part of the brain goes haywire with the people who get excited about 0% balance transfer offers on their credit cards. And when the 0% expires and becomes 20% and their debt never goes down, they blame it on the 20% and not that they are barely making the minimum payment. It happens when people are sold horrible whole life policies with huge fees, but they are promised some minimum rate of return that looks pretty good. And when they have good rates on their student loans so they mosey along paying them until they realize they are 40 and they are still paying them. So if all you do is invest part of your emergency fund in a high quality short term bond fund, you will be fine. I just don’t like the thought process that got you there.
|
|
#
?
Jun 20, 2012 15:35
|
|
|
quote:How reasonable is it to put part or all of your emergency fund into a low risk bond mutual fund? Look at your portfolio as a whole, instead of mentally accounting for your emergency fund. You really want your emergency fund in a completely liquid form, so take that as a given. Realizing that risk and return are essentially completely correlated, if you want to chase slightly more risk overall with your portfolio (which is what you're saying by wanting to put your emergency fund in bonds instead of savings), then instead of trying to move your emergency fund, instead, simply invest the rest of your portfolio slightly more aggressively than you otherwise would.
|
|
#
?
Jun 20, 2012 16:44
|
|
|
I really like that perspective. Until now, I've been thinking of my emergency fund money as a completely separate entity rather than a part of my total portfolio of assets. Sounds like it's time to readjust some of my allocations.
|
|
#
?
Jun 21, 2012 14:47
|
|
|
I'm trying to get about 3k in US Dollars to someone in the UK. Right now it is in Paypal but I'm thinking I'll open a new bank account (don't have one now), and send a check in the mail, or the actual debit card if ATM withdrawl over there would be cheaper. Google seems to suggest some US banks have deals with UK banks that would make for a better exchange. Advice on whether this is a good way to do it and which bank to open a checking account at here in the US?
|
|
#
?
Jun 21, 2012 17:10
|
|
|
I need help getting approved for a credit card! My bank (BMO  ) keeps declining me year after year, probably because I was a complete moron in my first year of university and cosigned with not one but two people for a cell phone account and wound up with almost $2000 in collections when one of them flaked out. Lesson learned, slowly and painfully.On the plus side, I have no debt whatsoever, and live well within my means (living with parents for free at the moment). Unfortunately I'm currently unemployed and with next to no money in the bank. If I understand correctly, the gimmicky reward cards with high interest rates are the easiest to get. I only want the card for use in one-time emergencies, so even a 500$ limit would be fine. It would also be convenient to get a card that offered rewards geared towards online bill payments or transactions (amazon, steam, that sort of thing). I currently have a pre-paid card for that purpose, but having to transfer small sums to it is annoying. Is there anything I can do to improve my chances of getting accepted and what cards should I be looking at?
|
|
#
?
Jun 23, 2012 18:37
|
|
|
Fruits of the sea posted:I need help getting approved for a credit card! You don't have an income, therefore you shouldn't get a card. If you want a $500 limit for emergencies, just save $500 in a savings account and don't touch it. It's really that simple, honestly.
|
|
#
?
Jun 23, 2012 18:43
|
|
|
|
| # ? May 5, 2024 03:03 |
|
|
On top of what Fraternite has already said, no one will approve you while you're unemployed, especially if you have virtually no credit history except for stuff that went to collections.
|
|
#
?
Jun 23, 2012 18:46
|
|
