Do you think an emergency fiat fund is wise? I lean on it depends on how wealthy the individual is... but genuinely asking for opinions after a discussion I heard on a podcast.
Discussion
Imo having a line of credit is the best option. Having one’s money fully invested and working for them and in case of an emergency use the line of credit, and liquidate assets as a last resort.
This is my preferred method as well, I want as much going into sats as possible, with credit and cash flows absorbing unanticipated expenses and emergencies.
I think wealthier people tend to land at this conclusion but is this true for middle class?
Why would it be any different? I’m a far way away from “wealthy”.
Because if you have no assets or low assets then credit is a last resort and you may not have a way to pay it back with the rates you get offered.
If you have assets and access to cheap credit then you can grow your assets while being able to use a line that you can pay back without financially drowning
Sorry, I guess we have different definitions of middle class.
Someone who is poor and doesn’t have any assets will not have any option for an emergency fund. Won’t they be living paycheque to paycheque?
I thought your original query was regarding someone who has funds to leave in cash for an emergency, or have it invested? This person should have access to a line of credit, or have some form of liquid asset that can be converted Ina n emergency. Many in the “middle class” have this option.
I mean it across the spectrum. You can make the case that the person living paycheck to paycheck would have benefited greatly from having more in sats than emergency fund from 2015 to 2020. Even if it was just a few dollars from odd jobs etc
I don't know but I think ultimately the net worth of the individual influences the emergency fund question a lot
At the extremes, of course, but I think the advice of not have any “money” in cash holds true for a lot of people. I’m not arguing for having everything in sats either. It’s too volatile to have emergency funds in. For now.
Stack humbly - Stay sats!
Properly a good idea, unless you can live on a #Bitcoin standard. Keeping fiat for emergency will protect you from liquidating your stack.
Link?
As a humble paycheck-to-paycheck sat stacker (psychopath) i personally have enough dirty fiat saved to cover a moderately expensive unforeseen emergency. If anything more costly were to occur, it would have to go on a credit card bc i am never selling a sat
Either that or discuss with wifu taking it out of our savings for a down payment on a house we’ll never afford anyway
Most seem to land here. One big emergency being the lowest and 6 months living the highest. If you're worth 40 million though I doubt you think about it though.
I'm not worth that, I am also in the humble sat stacker category but I can see how that might change
Enough to cover a few months of bills if you lost a job. Also allows some flexibility in immediate investment opportunities or emergency costs.
I like the angle on opportunities. On the other side of they are wealthy enough the bills won't matter.
Whatever emergency fund composition gets you a liquid and virtually guaranteed 6 months of your household’s fixed expense coverage is arguably wise.
If it is comprised of partial to all #Bitcoin , give yourself a reasonable double digit percent premium above the fixed expenses total to be ready for exchange rate drawdowns.
What if you can easily sell 1% of your assets and cover 6 months of expenses?
Easily sell = liquid I would conclude
Fair, is btc not liquid? I promise I'm not being difficult or leading you down a path, just asking more deeply around this topic
Ask away, no worries. Depends on jurisdiction. For most G20 countries, I’d argue BTC is highly liquid until you get roughly above the 7 figure USD mark. Then it may get tougher to exchange 1:1 at mark to market price with a single txn. The constraint being exchange liquidity. OTC txns may be a better route at that point.
I'd consider 3-6 months of liquid savings as an emergency fund
Totally depends on your situation and risk tolerance. For a single guy without too many obligations and some sats in cold storage - probably no need. For a father of a family of six with a mortgage and two car payments - hell yeah you need a emergency fund.
