Converting Half Of Emergency Fund Into Gold

Discussion in 'Money Matters' started by mangaii, Apr 25, 2022.

  1. mangaii

    mangaii Finest Post Winner

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    I'm thinking of converting half of my emergency fund into gold. Do you see any problems this way ?
    I have thought about this and don't see any issue unless gold value falls drastically which doesn't happen if there is severe recession or war. With inflation I don't see any use of keeping all in savings account.
    I want to make sure I don't miss any corner cases before implementing this idea. Any ideas or thoughts are welcome.
     
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  2. Laks09

    Laks09 Moderator Staff Member IL Hall of Fame

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    I would be worried due to the nature of selling gold. Gold ETFs are a good middle ground if you are keen on gold for its value. I wouldn’t put 50% of the emergency fund in a gold ETF. I would do like 10%. There are many other invest avenues for easily redeemable emergency funds that try to keep up with inflation some but also are fairly low risk. Even the emergency fund can be diversified(and I read somewhere that it should be diversified). Some people use a combination of high yield savings, treasury bonds, money market, CDs as primary avenues for emergency funds. That’s because those are easily available, fairly low risk, easy to access and most financial planners suggest it.
     
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  3. mangaii

    mangaii Finest Post Winner

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    Thanks Laks I have it on cd but the interest rate is 0.02 . The only reason for me not to move to high yielding savings is because most of them are dedicated online bank and I’m not sure if emergency funds can be kept there . Doesn’t cd interest rate be little higher to at least keep up with inflation?
    Looking at gas bill and grocery bill has been stressing me out . At this rate I should probably add more to my emergency fund .
     
  4. Laks09

    Laks09 Moderator Staff Member IL Hall of Fame

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    Tell me about it! It’s like what we thought was a good EF two years ago is suddenly not cushioning enough any more. Honestly, for my peace of mind, I just added to the EF but with inflation this high, I don’t know where this will all end.
     
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  5. mangaii

    mangaii Finest Post Winner

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    on top of that I invested in robo advisor model (from 2 diff firm) and both of them are down by 10% already
    I know I'm supposed to be patient but 10% is a lot to loose is what I feel
    I'm now wanting to fall back on safe bets like metal to avoid further loosing to inflation
     
  6. nuss

    nuss Platinum IL'ite

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    You can look for a local credit union. they might have a little better interest rates on CDs. I use Ally bank for half of the EF and keep the rest in my saving account or short-term CDs at the Credit union. Ally is online only but you can use Zelle to transfer to your other bank easily or use their debit card to withdraw from ATM. It's easy and the IR is a little better (0.5% currently).
     
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  7. EagerForInfo

    EagerForInfo Gold IL'ite

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    Gold is at a high rate now. Like the previous poster said when it’s time to sell it will become a problem for you if the value drops. I saw capital one has nice cd rates and its FDIC insured.

    There are rumors of a recession coming up . Best to save it as you are doing.

    What are the EFs you are talking about ?
    And please suggest a nice gold ETF.

    I tried to invest $100 in a gold penny stock and it went bankrupt !! I am totally new to the stock market. So I am utterly lost with regards to gold ETF.
     
  8. mangaii

    mangaii Finest Post Winner

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    You can buy 1 gram of gold for $90.
    It comes in all denominations. EF is Emergency Fund. Gold is physical form is better than paper form. You can transact the physical gold in India too to buy jewelry. You can have consultation with financial advisor. The consultation is free
     
  9. mangaii

    mangaii Finest Post Winner

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    Thanks nuss . I already have account in local credit union. Should probably check with them for interest rates.
    I understand the home loan interest is low but this cd rates are killing me.
     

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