I have a certain level of cash sitting in my current account and anything above this level gets moved somewhere useful. I think of this cash buffer as my emergency fund.
I’ve never had any sort of emergency and in Switzerland with unemployment insurance being what it is, I struggle to imagine what kind of emergency could require me to need instant access to cash.
If I was back in the UK I would probably put this money in an instant access savings account where I would at least get 1.3 %. What does anyone do in Switzerland?
I guess in UK that 1.3% would barely, if at all, cover the inflation. In Switzerland you don’t have this problem. It’s just an illusion that time deposit makes money.
It’s a good question about possible need for emergency fund. Well, what if your kid got kidnapped and the kidnapper wanted 10’000 by tomorrow?
But seriously, what I can imagine is for example, that the bank stops working for a couple of days due to some error or international crisis and you can’t pay with your credit card, nor withdraw. What can you do then? I must admit, I do not keep any cash at all. Can’t remember the last time I’ve been to an ATM. I guess that’s irresponsible?
my emergency fund is where it is most accessible: in my PostFinance checkings account.
I actually wondered about putting it to the the money maret (“tagegeld”), but i never investigated.
to squeeze out 0.05% i could put it on a sparkonto with Postfinance.
Sounds like I won’t be getting a significant interest rate for cash savings. I suppose I’ll have to make do with the negative inflation to make my cash worth a little more than last year.
On the question of whether it’s worth having an emergency fund at all, I’m still not sure. I imagine that I could ask kidnappers to wait a few days while i sold some ETFs if i had to. The main reason most people have emergency funds worth 3-6 month expenses is to cover a period of unemployment and that’s not necessary here. I’m not ready to get rid of it yet but will to continue to reflect on it.
I think my conclusion is that an emergency fund should stay in a current account but maybe be a bit smaller.
I completely agree with you. If you really need money fast, you can use your credit card. You can easily negotiate a card with a high limit.
On my side, I prefer to take the risk by investing in stocks and in worst cases sell some. The stocks market is very liquid, you can have money from your stocks in less than 3 days.
just another view (i dont value it very high)
the three month emergency depot is indoctrinated to all people seeking or not seeking financial advice. 99% of those are much wors in keeping their money together than typical mustachians. so maybe the emergency fund deserves another definition than commonly heard
Well my credit card limit is 8000 CHF, and I didn’t negotiate for it, they just gave it to me. Don’t if it’s low or high, but it would be enough to cover my 3-months food + rent.
I keep CHF 10k in a savings account as an emergency fund. I try not to ask myself “why 10k?” or “why in a savings account”, because admittedly I don’t have a good explanation for either beyond the fact that it’s visually pleasing and a bit reassuring each time I login to my online banking. That’s it. I don’t have a better rationale than that. But it’s okay… I accept that I am not a true mustachian in every aspect.
What would constitute an emergency is a great question. For me, I suppose a sudden death in my immediate family where I would need to book an (expensive) flight to North America on short notice, take unpaid leave, and perhaps pay for funeral costs and other matters. On the other end of the spectrum, if the stock market collapses and I’m feeling particularly confident about my job security, I might take this money and reinvest it. This would of course be risky, and is also trying to “time” the market to some extent… but again, those of us on this forum are likely too interested in personal finances and investing to take a purely 100% passive/mustachian approach all the time.
If you want a second level emergency fund look here: http://www.coop.ch/de/services/depositenkasse.html
I think it can’t be considered “first level” since I think you should wait 6 month before being able to withdraw the first time.
It’s not very easy to reach, but I think you can use it to gain a tiny bit (0.25% as of today)
Hi!
First time posting but reading the forum since a long time
Emergency fund: we have one, and it’s 30000 CHF, we keep it in two different savings accounts (maximum withdrawal of 20k per account per month).
As many sayd already I’m not sure if in Switzerland there is really a need for an emergency fund… but having one in place makes me feel safer and I can sleep better
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