Comments on: Canadians not ready for downturn

By: DLA

DLA — Sun, 15 Jun 2008 13:40:59 +0000

I agree with Anonymous. I think the notion of having an emergency fund is a bit antiquated. Keeping anything over $5,000.00 in a supposedly "high interest" savings account which is actually below the actual rate of inflation is foolish. However, the real issue is managing personal debt (i.e., no high interest rate cards "whether platinum or gold", accepting the limitations of your buying power and most importantly knowing the difference between need and want). All lessons most of us have had to learn the hard way.

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By: Anonymous

Anonymous — Thu, 22 May 2008 18:53:21 +0000

I don't know if I understand what constitues an emergency savings account, but I'm imagining something highly liquid, that loses purchasing power over time. I think of my untapped HELOC as my emergency fund. It serves the same function, but costs nothing. If I lose both jobs, can't find another, my HELOC is frozen, I can't sell or rent my house and I've burned through my RRSPs and other assets, then a rainy day "savings account" probably wouldn't make much difference. As long as I have credit avaiable, I don't see any reason for emergency savings. Long term savings sure, but not emergency savings. I would only put up with inflation and taxes eroding my earnings in an emergency "savings account" if I anticipated a reasonable high likelihood of needing the money very soon. Wouldn't that explain the findings? Many don't need an emergency fund, and for those that can't save a meaningful emergency fund, there is social assistance. So who's left? Perhaps there's relatively few caught in between those positions, rather than a whole lot of risk takers and poor folks.

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By: Deliverator

Deliverator — Thu, 22 May 2008 16:23:49 +0000

The question isn’t “How much of your portfolio is in cash?”, it’s “How much money do you have saved, period?” Actually, the question was: Do you have a ‘rainy-day’ savings account for emergencies? That, IMHO, reads a lot like 'cash' to me. It would not include investments like stocks, bonds, mutual funds, etc. That was the subject of a survey a couple of months back, IIRC.

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By: Aleks

Aleks — Thu, 22 May 2008 13:24:25 +0000

How much to keep in an emergency fund is a separate discussion, but the fact that you're even considering it probably puts you in the "six months or more" category. The question isn't "How much of your portfolio is in cash?", it's "How much money do you have saved, period?" Half the population has nothing saved, and another quarter only have enough for one month's expenses. When you start quibbling over whether to keep $5000 or $10,000 in a savings account, you're already in the 90th percentile at least.

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By: Deliverator

Deliverator — Thu, 22 May 2008 11:58:03 +0000

When you refer to a rainy-day account, what is that exactly? I have plenty of assets and zero debt, but I don’t see the point in holding too much money in some “high interest” savings account which is really being eroded by inflation. I would concede your point, Warren, but it still makes sense to have a couple of months (at least) expenses in cash (or some other highly liquid asset) quickly available for emergencies.

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By: Warren

Warren — Thu, 22 May 2008 07:51:42 +0000

When you refer to a rainy-day account, what is that exactly? I have plenty of assets and zero debt, but I don't see the point in holding too much money in some "high interest" savings account which is really being eroded by inflation.

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By: Drachen

Drachen — Thu, 22 May 2008 06:51:51 +0000

patriotz "...higher taxes and higher cost of living right across the board (Germany..." I've lived there and I can tell you the taxes are higher but the cost of living is lower. Scandinavia as well I believe. But more importantly for families starting out both have subsidized daycare (free through most of Scandinavia I believe).

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By: Michael Randallbard

Michael Randallbard — Wed, 21 May 2008 22:55:41 +0000

http://www.kitco.com/ind/AuthenticMoney/may202008…

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By: Michael Randallbard

Michael Randallbard — Wed, 21 May 2008 22:54:38 +0000

Lest We Forget a Certain Little Bet

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By: patriotz

patriotz — Wed, 21 May 2008 21:31:46 +0000

Pre-sale buyers (at the Anvil) have received letters from the developer saying they have 14 days to decide whether they want to pull out and get their deposit back or pay the additional costs.

Is that a no-brainer or what?

Take the money and run.

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