Read a few threads here on this and still not sure if I should or shouldn't have an emergency fund now that I am retired. The argument to have an emergency fund is that you have risk free capital available in case of some unforeseen event so that you don't have to sell any equities at a bad time in the market. The argument against is that you could simply sell bonds in case of an emergency and sure, it would increase your withdrawal rate of the current year but you could cut back the following year to compensate for it.
I am leaning on having a small amount in a 3 month t-bill, this way I am not going to get completely destroyed by inflation - at the moment rates at the short end are above inflation but I am betting huge cuts are coming and we're going to see negative real rates at the short end again. Perhaps the 3 month will at least keep up with inflation and you will not take too much of a hit in case you need to sell in an emergency.
Thoughts? What are you guys doing? Cash, t-bills and if so, what percentage of your annual budget?
I am leaning on having a small amount in a 3 month t-bill, this way I am not going to get completely destroyed by inflation - at the moment rates at the short end are above inflation but I am betting huge cuts are coming and we're going to see negative real rates at the short end again. Perhaps the 3 month will at least keep up with inflation and you will not take too much of a hit in case you need to sell in an emergency.
Thoughts? What are you guys doing? Cash, t-bills and if so, what percentage of your annual budget?
Statistics: Posted by stocknoob4111 — Fri Aug 09, 2024 7:27 pm — Replies 14 — Views 1445