Is there a time to not build an emergency pot?

Forum_Name

DiggerUK wrote: »

If you have a savings LISA, then it is a dual purpose house deposit saving vehicle and emergency fund. If you feel happier with two savings accounts then fine.

I think i would be to be honest.
I know the Lifetime ISA can be used as an emergency fund, but at a cost. Unless of course i'm dying, but then i'd be dying so who cares right? For me the Lifetime ISA is fine for a house and retirement but a standard savings account would be better for an emergency fund. Each to their own though on that one.

When you get mortgaged, concentrate on killing the mortgage asap, zero rate credit cards will take care of emergencies. Retirement savings are important, but horse before carriage, i.e., house before retirement plans.

Thank you for your view. In light of the advice given here i think i will reassess my strategy going forward.

Bravepants

An emergency pot is not only there just in case you lose your job, but for many other what-ifs, for example a car (or bike) breakdown, repairing/replacing your computer, a need to visit a sick relative, getting away from an abusive spouse/partner (yes seriously!).

You should always have a stashed pot somewhere that you only touch in emergencies, and is kept solely for your use in such cases. This may not buy you a house, but it buys you freedom!

In my opinion this is low hanging fruit, which you should aim for and should be top priority.

SlaveToMyCats

OK so here's a question that is related enough to not deserve its own thread.



Can holding a bonds ETF inside an ISA partly mitigate the need for emergency cash? Could I, for example have an 'emergency fund' which is 10% cash and 90% bonds ETF.



Thanks!

Eco_Miser

Forum_Name wrote: »

Thank you for the advice. I actually have no debt at all but i appreciate you were probably saying it in a just in case sense.
Fair point. Thank you.

Yes. I was answering your headline question, for the benefit of anyone who finds this thread later, and perhaps is wondering whether to pay off debts or have an emergency fund.

Forum_Name wrote: »

That would be 5% in the workplace pension then, alongside their 3%.
As far as pensions can wait goes, how long can they wait? I know that is a piece-of-string type question but i'm mindful of getting to an age with a pot much smaller than i should be at.

Under the current regulations you can put the lesser of £40k or 100% of your relevant earnings into a pension tax-free (and pay tax on some of it when you draw your pension). If you expect your salary to rise considerably in the future, that would be the time to concentrate on the pension, otherwise up your pension contributions as soon as you have the house and any needed fixing up.

katsu

pensions compound so the earlier you can save the better off you are in the end. Also, if you end up paying higher rate taxes then pensions are even better value.

For now I would take the auto-enrolment pension deal at your work and save as much as you can from the rest of your income. There are some great Debt Free Wannabee threads where you can pick up great tips for saving cash and making your money go further.

Forum_Name

SlaveToMyCats wrote: »

OK so here's a question that is related enough to not deserve its own thread.



Can holding a bonds ETF inside an ISA partly mitigate the need for emergency cash? Could I, for example have an 'emergency fund' which is 10% cash and 90% bonds ETF.



Thanks!

I would have thought putting your cash at risk of being less than you put in would not be a good idea? Even if it's 90% bonds, surely there's a chance you could end up with less? I understand about inflation meaning your £100 in will not buy you in 10 years what £100 would do today but you'd still have £100.

Eco_Miser

katsu wrote: »

pensions compound so the earlier you can save the better off you are in the end.

ISAs also compound, at the same rate, and are more accessible.
And as you say

katsu wrote: »

Also, if you end up paying higher rate taxes then pensions are even better value.

So it might be worthwhile to save outside a pension until you hit that higher rate, then live off your savings while dumping your earnings into your pension and getting a 40% uplift.

This is general comment, not individual advice. Circumstances vary. Tax treatment of pensions may be varied at any future budget.