How much cash for house emergency?

PixelPound

https://forums.moneysavingexpert.com/discussion/comment/82141778#Comment_82141778

For Regular Savers, check the terms as some don't allow withdrawals until maturity, where as others do (some limit the number of withdrawals, which is fine for emergencies). I believe most of the 8% ones allow withdrawals. If you don't mind a bit of admin, it's easy enough to have several RS maturing on different months so that each time one matures it's used to feed the others so that the amount of time money is spent outside of a RS is small.

GeoffTF

The assumption for discussions like this is often that the emergency cash is all the cash that you have in the world, and your income stream can stop. If you are a pensioner, you cannot lose your job. You may also be able to raise cash at a small cost and delay by selling safe investments. There is an opportunity cost to carrying cash. There are psychological factors too. Are you someone who likes to have lots of ready cash, or are you someone who likes to run a tight ship? In some cases, the answer is to hold very little cash.

ZeroSum

https://forums.moneysavingexpert.com/discussion/comment/82142567#Comment_82142567

Out of the main higher rate ones, think its only really FD who dont allow access.

Hammer56

The OP says they have long term investments but the doesn’t stop that being part of an emergency fund. If they have a Stocks and Shares ISA or General account, some of that could be assigned to Short Term Money Market funds which (in practical terms) earn interest every day at the prevailing Bank of England Sonia rate and won’t go down. Therefore there is no risk of having to sell low when the FTSE or S&P have tumbled.

It would take a week to sell and withdraw, but for the vast majority of situations such as big home repairs that is plenty quick enough. And all the while the disaster hasn’t happened the money is working for you every day. And if it is in an S&S ISA you have all the tax advantages too.

I no longer have instant access savings, this approach works best for me. It won’t work for everyone, but is an often overlooked option for people with investment ISAs.

Linton

I hold a large amount of close-to-cash. The reason is that my long term investments are 100% equity. Knowing that any reasonable expenditure for the medium term is covered by cash means that equity market volatility can be completely ignored.

The overall % equity may be the same as for those people who hold safe fixed interest funds in their long term portfolio but keeping the two separate makes asset allocation less arbitrary (eg the 60/40 rule) and easier to manage.

subjecttocontract

Id like to thank the OP for asking this question. Before this I had not given much consideration to emergency funds or how much I had in easy access accounts etc. Now I find that if I take into account premium bonds, flexible ISA, current accounts, easy access accounts & a few regular savers I have far to much which is easily accessible. I can move some of it into fixed term accounts.

jimjames

Most investments if inside an ISA are immediately accessible and money could be in your bank account within a week. Do you really need to have more in cash on the off chance you might need it when you can get money if required?

subjecttocontract

I assume that if you withdraw funds from within a S&S ISA you cannot pay it back in later. Whereas with a flexible cash ISA you retain the opportunity to replace the money tax free.

masonic

There are flexible S&S ISAs. I used my Trading212 S&S ISA recently to fund a house purchase and am making replacement subscriptions as my collection of regular savers matures. I would not have done that if we were in the midst of a market crash though.

Albermarle

I think in this discussion we can not ignore the fact that cash savings are beating inflation ( and have done for a couple of years) and of course are a 100% secure. So reducing cash savings to a minimum level, is probably not as much as a priority as it has been in previous times. Depending on personal preference and strategy ( and age ) of course.