Re:Save like a pessimist, invest like an optimist
by loxs on Saturday November 14, 2020 @03:53PM
(#25095523)
This sounds true if you only optimize for (hedge against) one risk only - stock market crash.
To me, an emergency fund is a hedge against various different risks like these (I am guilty of not being prepared for all of them):
1. A pandemic. For this I was ready even before we thought it's indeed possible - I have funds in several different banks (debit cards) that allow me to not have to visit a bank physically for several years (even if some of the cards expire in the meantime, or one bank suddenly goes bust)
2. AI glitch, identity theft, a bank holiday (this happened to me actually some years ago) that blocks you from accessing banks (and investment brokers if you have nowhere to withdraw your funds) for several weeks/months - for that you hold paper cash, physical gold and cryptocurrencies stashed at different physical locations.
3. Natural disasters - again some combination of diversified physical and virtual funds
4. Legal trouble - yes, even if you are not guilty you could get your funds blocked.
I presume you are from the US, hence the purple goggles ;) (I hope I'm not offending you)
To me, an emergency fund is a hedge against various different risks like these (I am guilty of not being prepared for all of them):
1. A pandemic. For this I was ready even before we thought it's indeed possible - I have funds in several different banks (debit cards) that allow me to not have to visit a bank physically for several years (even if some of the cards expire in the meantime, or one bank suddenly goes bust)
2. AI glitch, identity theft, a bank holiday (this happened to me actually some years ago) that blocks you from accessing banks (and investment brokers if you have nowhere to withdraw your funds) for several weeks/months - for that you hold paper cash, physical gold and cryptocurrencies stashed at different physical locations.
3. Natural disasters - again some combination of diversified physical and virtual funds
4. Legal trouble - yes, even if you are not guilty you could get your funds blocked.
I presume you are from the US, hence the purple goggles ;) (I hope I'm not offending you)