Cash better than bonds?

Audaxer

MatthewAinsworth wrote: »

I think at least the emergency fund has to be cash, although I don't think I'd ever be more than 2 months from a paycheck in a new job if I needed one (agency work, etc) so any more in that pot is overkill.

I think most people that have savings and investments would want to keep a lot more cash than that for emergencies. Not just to guard against being out of work for a while, but for emergency or large ticket expenditure like car repairs, holidays, house repairs, new furniture, or anything that is not part of normal monthly expenditure.

Thrugelmir

Ray_Singh-Blue wrote: »

Why has the total return has been higher than the yield?

The price that is being paid for the nominal value has increased. Many issues trade at above par value. Downside is that on redemption a capital loss will be crystalised. Yield to maturity, rather just the running yield, needs to be factored in.

System

Audaxer -

. I think most people that have savings and investments would want to keep a lot more cash than that for emergencies. Not just to guard against being out of work for a while, but for emergency or large ticket expenditure like car repairs, holidays, house repairs, new furniture, or anything that is not part of normal monthly expenditure

For me only the car is essential and I'm a dedicated follower of bangernomics - all i need for that emergency is £600 max, I think that's because most people, unlike me, only start investing when they're on a comfortable income, and generally buy themselves all these things before they build up the savings when the bank starts talking investments to them.

I'm used to sleeping on a mattress on the floor, my furniture is falling apart, I bodge my garden fence back up whenever it blows down, my passport is expired and I'd only consider getting another for ID purposes, we don't have a dishwasher or sufficient freezer, but I can live with all that more easily than not being FI. Discretionary stuff can wait for good market conditions

coyrls

MatthewAinsworth wrote: »

Discretionary stuff can wait for good market conditions

Crikey, if you don't think market conditions now are good, you're going to have a long wait.

System

They are but im not ready to spend, I'll wait a few market cycles

Eco_Miser

MatthewAinsworth wrote: »

For me only the car is essential and I'm a dedicated follower of bangernomics - all i need for that emergency is £600 max, I think that's because most people, unlike me, only start investing when they're on a comfortable income, and generally buy themselves all these things before they build up the savings when the bank starts talking investments to them.

I'm used to sleeping on a mattress on the floor, my furniture is falling apart, I bodge my garden fence back up whenever it blows down, my passport is expired and I'd only consider getting another for ID purposes, we don't have a dishwasher or sufficient freezer, but I can live with all that more easily than not being FI. Discretionary stuff can wait for good market conditions

Roof blew off (or was so damaged replacing it was more sense than repair), boiler broke down (and was so old it should have been replaced years ago), shower failure was the last straw so got whole new bathroom. Just three incidents in my life where having the odd three grand sitting around came in handy.

I keep cash for a variety of reasons, not just an emergency fund, but to smooth out income, and because the promotional accounts pay better than bonds.

Incidentally, I've never been on a comfortable income (judging from amounts mentioned on this board), and was investing long before any bank thought to suggest it to me. Don't have a dishwasher, nor passport, nor garden fence, nor car of any description, but I don't sleep on the floor at home.

OldMusicGuy

Eco_Miser wrote: »

Roof blew off (or was so damaged replacing it was more sense than repair), boiler broke down (and was so old it should have been replaced years ago), shower failure was the last straw so got whole new bathroom. Just three incidents in my life where having the odd three grand sitting around came in handy.

Three grand for a new bolier, roof repair and a new bathroom? You really are a very successful Miser!!!!:T;)

System

Would buildings insurance do roof I presume? Boiler is a risk for me, not an absolute necessity as we can use electric shower and buy electric radiators in the short term, but insuring the boiler might make some sense maybe. My last place had a mixer shower which is more expensive than a simple electric one i have now for reasons i dont understand but its something my car fund would cover

I've decided that I can keep empty old credit cards open as a kind of extra emergency fund without the feeling of inflation or opportunity cost. It would incur interest to use them but its outweighed by the opportunity of being more invested 99%of the time

Eco_Miser

OldMusicGuy wrote: »

Three grand for a new bolier, roof repair and a new bathroom? You really are a very successful Miser!!!!:T;)

Three grand each, in very round figures, so not quite so successful.

MatthewAinsworth wrote: »

Would buildings insurance do roof I presume?

If the roof actually blew off, but you might need to pay to get it fixed and then claim.
In my case it was a tile here, a tile there, a load of tiles looking dodgy; so I decided to get the whole roof done in summer rather than pay now for the missing tiles then pay later when some more came off and it all needed doing in midwinter.

MatthewAinsworth wrote: »

Boiler is a risk for me, not an absolute necessity as we can use electric shower and buy electric radiators in the short term, but insuring the boiler might make some sense maybe.

Few things are absolute necessities, but going without comfort just to make a little extra money? You sound like more of a miser than I am.

MatthewAinsworth wrote: »

I've decided that I can keep empty old credit cards open as a kind of extra emergency fund without the feeling of inflation or opportunity cost. It would incur interest to use them but its outweighed by the opportunity of being more invested 99%of the time

That could work.

System

I could imagine buildings insurance being very slow too, my neighbours landlord had to go months without Tennant's waiting for his insurance to pay the damages of the last one. It is a good point about paying and then claiming

Looking back at interest rates Vs inflation rates I do feel more positive about cash, especially now rates are gradually rising

I just want to get some momentum going really, saving has been a struggle, I've come a long way (got house) but still have to pay for a wedding somehow and don't want to keep waking up early for work. I also feel like my equities income is more secure than job income, as it's more diversified

I am stoozing at moment but not sure if it's a false economy with what that utilisation does to my credit rating - remortgaging far more important