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No Lifer
If you're putting money in a savings account, and intend to hold it long term, you don't deserve to have that money. It should be in a better area, namely the stock market.
For us, our cash flow and expenses are such that the "emergency fund" is secondary to my goals of putting money in a 401k (until we know with certainty that we won't be returnign to canada, the tax implications of a Roth IRA are not good), so once 10% of income is contributed to the 401k, NEXT is making sure there are a few thousand in a savings account (any more than that and it's just losing too much money in potential returns). Once that's taken care of, next up is whatever spare money can be thrown into an unsheltered account (index fund, specifically).
Near the top of that priority list is education/savings fund for skoorbaby, which is also an unsheltered fund (again, tax implications of possible return to canada make 529 and ESA unattractive).
I always think the so-called "emergency fund" is overblown. You cannot plan for everything, so realistic emergencies are a major car repair, or job loss. A car repair can be covered, if you want it to be, on a credit card. The sort of person who has good investments, and could otherwise have his 3-6 months in savings, should be able to pay that off in a month or two anyway. Next up on the list is job loss. This is partly countered by unemployment insurance, and secondly by massive spending restrictions at time of loss. Of course savings will come into account, but most people can massively slash their budgets if they lose their job. And if you blow them, hell you can start tapping gently into your non-retirement accounts.
Diversification for me means a couple of index funds. Let them diversify. Costs related to mutual funds ensure that 80%+ of mutual funds do not even match the market, so why bother even trying to find a good one? Pick a couple of index funds and be done with it.
For us, our cash flow and expenses are such that the "emergency fund" is secondary to my goals of putting money in a 401k (until we know with certainty that we won't be returnign to canada, the tax implications of a Roth IRA are not good), so once 10% of income is contributed to the 401k, NEXT is making sure there are a few thousand in a savings account (any more than that and it's just losing too much money in potential returns). Once that's taken care of, next up is whatever spare money can be thrown into an unsheltered account (index fund, specifically).
Near the top of that priority list is education/savings fund for skoorbaby, which is also an unsheltered fund (again, tax implications of possible return to canada make 529 and ESA unattractive).
I always think the so-called "emergency fund" is overblown. You cannot plan for everything, so realistic emergencies are a major car repair, or job loss. A car repair can be covered, if you want it to be, on a credit card. The sort of person who has good investments, and could otherwise have his 3-6 months in savings, should be able to pay that off in a month or two anyway. Next up on the list is job loss. This is partly countered by unemployment insurance, and secondly by massive spending restrictions at time of loss. Of course savings will come into account, but most people can massively slash their budgets if they lose their job. And if you blow them, hell you can start tapping gently into your non-retirement accounts.
Diversification for me means a couple of index funds. Let them diversify. Costs related to mutual funds ensure that 80%+ of mutual funds do not even match the market, so why bother even trying to find a good one? Pick a couple of index funds and be done with it.
Roth you set the terms (make payments yourself, or have it withdrawn on a monthly basis from your checking). 401k is taken out by your employer each pay check.
Nail=hit. Vanguard's information is incredibly useful. So is fool, but as mentioned, in time they start thinking you need to pick stocks, which is entirely untrue. Picking individual stocks is gambling. Unless you are good (most people, no matter what they think are not), this is what you do with your play money, not the bulk of your money.
Heck yeah one or two grand is enough! Vanguard, for most of its funds, requires a minimum of $3k for an unsheltered account, but they have one that requires only a grand.
That's one approach, but I would personally guess that 10% of the adult population actually has 3+ months after-tax money sitting in a savings account. Of course, most adults don't even know how to spell investment, so that isn't surprising.
