Emergency Fund for Real Estate Owners

I used to have a minimal emergency fund.

In Switzerland many risks are covered:

  • unemployment insurance
  • health insurance max. franchise and co-payments
  • disability and death insurance trough 1st, 2nd and 3rd pillar
  • I have a third party liability insurance.

Alternatives to emergency fund:

  • salary
  • salary spouse
  • credit card limit
  • loan from family

Risk to be covered by emergency fund:

  • intercontinental flight to visit elderly family members
  • spontaneous holidays
  • health insurance maximal co-payments of CHF 3’2000 (2’500 + 700)
  • CHF 3860 for 2nd class GA (we don’t own a car)
  • housing emergency maintenance

Since we become owners of our primary residence (exclusively primary mortgage, no secondary mortgage; only cash downpayment, 2nd or 3rd pillar untouched, mortgage sustainability acceptance with single income) I am reassessing the emergency fund. Fire insurance is mandatory, and I will get water insurance. The oil heating is shared by a total of 7 parties. Are there any housing related risk you take into account for your emergency fund?

I wouldn’t count on the disability insurance.
The state of our disability insurance is so that you can’t really count on it and there is no way of insuring it because every other insurance will depend on the decision that the disability insurance of the government makes.

There is also the possibility of a margin loan to cover emergencies.

A GA isn’t an emergency. It is a planned expense.


Alternatives to emergency fund:

Selling some ETF? I know it can happen that you have to sell the below average price. But what if you don’t?

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That’s when you take a margin loan instead… selling above purchase price is also ok.

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I recently reduced my emergency fund from 50k to 25k and will lower it further after the final tax bill of 2020 (due in June). Housing stuff is covered by household insurance and house insurance and renovation fund. I don’t bother about the 1% maintenance stuff since I probably sell the apartment in the next 10 years or so…

I remember one of the post about the same question and if in CH you really need to have an emergency fund.

I am on the opinion of unemployment insurance should cover the majority of the use cases that emergency fund will kick in and a minimal cash (5-10k) to cover unexpected expenses. (may this cash availability is my emergency fund)

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