Emergencies funds is an important part of our Financial Freedom plans that we have. We want our Money working for us the best it can and still be able to get to some of it that we may need for Emergencies. Money hit under your mattress doesn’t earn anything or even can be worth less next year because of inflation.
Some people like to put their money they use for Emergencies with their local bank in a savings account. They feel they can get to the money easily and be able to have it available for Emergencies.
Darlene and myself we want not only to be able to reach get our Emergency Funds when needed but also to make some money off it. We teach the boys to have their money work for them.
For instance, we currently have $30,000 in our Emergency funds. If we had the money in the following places this is what we may be making off of it in a years-time. If in;
1, A safe under our bed we may make $0. Yes, zero dollars interest, zero dividends and zero chance of a going up in value.
2. A Savings Account at your local bank and you make very little. So, you may make from $3 to $30. Whoopee … LOL
3. A Money Market account with an Investment company making 1.32% we may make $396.
4. Dividend Stock Fund with an Investment company making 3% we may make $900 a year plus it could go up or down in value. This is where our money is in.
As always, I am not giving you any Financial Advice and you should seek advice from your Professional Advisors to see what is best for your situation. See my Disclaimer at MillsWay.com. This is for entertainment only.
Of course, everything really boils down with your own tolerance on how much you can handle on the possible up and downs of the stock market. All four of the above examples can be liquidated in a short period of time to be able to pay for your Emergency expenses that come up.
Money Market Accounts can range from 8.9 to 14,3 times your Bank Savings Account rates based off of Fidelity’s website information. Money Market Funds can be fixed income Mutual Funds that invest in debt securities characterized by short maturities and minimal credit risk. See the link in the below show notes.
Here is some more Fidelity’s information about the benefits of a Money Market Fund. They Said the following;
- “Has Stability and Safety. While not insured by the FDIC, the funds are required by federal regulations to invest in short-maturity, low-risk investments, making them less prone to market fluctuations than many other types of investments.
- Liquidity. Easily retrieve funds from a money market mutual fund to get cash, pay a bill, or make another investment in your account.
- Competitive yields. We are focused on helping investors achieve their financial goals while taking a conservative approach toward managing risk.
- Potential Tax advantages. Money market yields are carriable and can be a potential source of tax-efficient income for accounts exposed to taxes.”
As you know I am a fan of divided stocks and like to be diversified with solid companies. Dividend stocks is one of our streams of passive income. So, for us if is just natural to have our Emergency funds in a solid Dividend stock fund.
Let me know if you have an Emergency fund and if so where do you have the money stashed away.
For us we want every possible dollar we have out there working for us. We keep the cash in our checking accounts pretty low so we have the most money we can out their working for us.
Yes, there is always a chance the dividend stocks may go down in value at times but some say that 50% of stock market corrections recover in about two month’s timeframe. Plus if you look at the stock market history it looks like a jagged chart but with the ups and downs it is almost like a step ladder of time. Look at it from 1924 to now. There are some days, months or years that the market is down and some it is up. But over the last 96 years it has been gradually increasing.
With inflation over time the purchasing power of cash keeps going down. For example, dollar times said average gas price in 1965 was 31 cents a gallon and the average last year was $2.50. So if you had a dollar from 1965 it could have bought you over 3 gallons of gas. Now it only can buy you four tenths of a gallon. This is why we want our money invested making more money than inflation to keep up with the current buying power of our money.
Here are some positive quotes I like;
“1. Make Money. 2. Use the Money to Make More Money. 3. Repeat the Process.” By Warren Buffett
“There is no way to happiness; happiness is the Path.” By Buddha
“Change Your Thoughts – Change Your Life” by Wayne W. Dyer
Let me know your thoughts about this blog and let me know of others you would like me to do in the future. I feel we can all learn from each other. That is why I am in the helping people retire early, enjoy life more and be more successful. Also, please see my Disclaimer page.
Don’t give up on your dreams; don’t let others talk you out of your dreams. Make your dreams happen. Make it happen today.
Visit my Podcast at www.Live4.Club on Anchor.fm, Spotify, Pocket Casts, Breaker Audio, Google Podcasts, Radio Public, I-tunes, Apple Podcast and more. If you would like to be a guest on my Podcast drop me an email at email@example.com or Text me at 480-389-6224
Thanks, and Have a great night. Please Support or Follow me at https://www.patreon.com/millsway for access to all my blogs.
#financial freedom #financial independence #FIRE #Hustle #Live4 #podcast #millsway
Sources and Resources from Podcast (Available in Show Notes)
- Gas Price 1965