Clarifications On My (Or Lack Of) Emergency Fund Situation

From the outside looking in, I guess many might view me as a young, brash and authoritative wannabe (from the way I write) who has crashed into this increasingly saturated personal finance blogging sphere. After all, with only 2-3 years of both working and investing experience, what gives me the right to be arrogantly dispensing personal financial tips to the reading public? Seriously, what can I offer?

“What, no emergency fund?! He must be one of those Gen Ys who expects a shiny unicorn on top of the flowery lawn. Life isn’t that perfect, dude. Wait till you get hit by life’s inevitable disappointments and tragedies.”

I will be the first to raise up my hands and admit that the original title of this post “Why We Don’t Keep An Emergency Fund” is at best, misleading. And it’s unfortunate if some people only read the title or the first few paragraphs (really appreciate those who read that full post and tried to defend me by making reference to my third point) and take the information (or worse, advice) as such.

Besides illustrating the point that 30% of my assets are in cash or cash equivalents in that particular post, I have also written about the importance of holding cash in order to sleep well at night in an earlier and separate article. To most people, those balances can be considered as a form of emergency funds. So yes, I ain’t that big a risk-taker and I do keep plenty of cash.

But then, as correctly pointed out by many readers and bloggers, isn’t those monies part of a warchest for investment opportunities? And if I become 100% invested in equities, the cash and emergency funds would disappear. Theoretically, yes. I had initially thought that if the STI index drops to 1,500, I would probably have been 90% invested already and if it then drops to 1,000, I could exhaust all my cash at that time. Even though such a scenario is very unlikely to happen, my dear wife has convinced me that even if both of our jobs are safe in that situation, she would probably not sanction the transaction.(Now we all know who wears the pants in the house. =p)

Therefore,we have decided that at this present moment, the $10k in my CIMB account (together with the minimum amount we have to hold in other bank accounts to avoid penalty charges) would form our current emergency funds. The 0.8% interest would help to partially offset the cost of holding the cash. I guess I am probably just playing with words and definitions as a part of the opportunity funds (I even list this account as part of my passive income portfolio) will now be called an emergency fund?

I don’t know if this constitutes a reversal of my stance in the previous post on this issue, but at the very least, it’s a softening? So yeah, I am going to keep a separate emergency fund, even though it’s still a relatively small one.

Blogging isn’t supposed to be a one-way traffic (information) and I have learnt that besides preparing for the outcome of losing one’s job, the emergency fund is also supposed to provide us with the intangible peace of mind. So how much cash one wants to keep is largely a personal and private choice. Some people believe that when it rains, it pours.

But letting this issue just die down like this is abit of a waste, isn’t it? After all, I always had issues with those one-size-fits-all-approach adopted by many of those so-called personal finance experts. So instead, I shall try to analyse the factors that would influence/determine the appropriate amount to have as emergency funds in the next post.

Before I end off, I would like to emphasize that except for some initial shock at some of the comments, I am actually quite glad that my post has triggered some debate (and even follow-up posts) on the usefulness of an emergency fund. Sets people thinking and questioning some of their long-held assumptions, including mine.

Maybe you detest my views on emergency funds, but perhaps we are similar in the sense that we both do not see the value of owning a car in Singapore or believe in saving >50% of our incomes? Not so different after all, eh?

So I really hope that the personal finance blogging space has some room for diversity. If all of us are the same, wouldn’t that make all of us boring and some of us obsolete? As what AK71 had said, let’s agree to disagree in a civil and pleasant way. That would make this fun and interactive community an even nicer place to be a part of!


13 thoughts on “Clarifications On My (Or Lack Of) Emergency Fund Situation

  1. Jared Seah

    15 HWW,

    I used to be a story teller.

    Long time no write short stories liao.

    I can’t hide a tiny tinge of disappointment. This post would have been better if it had come as a result of you banging your nose against the wall, or you tripping over a man-hole…

    Youth, your strength is not knowing what cannot be done!

    Just because you have a wife does not mean I have to have a wife too. Wink, wink.


    I now start singing in my shower:

    I believe I can fly…

      1. My 15 HWW Post author

        Hi Createwealth 8888,

        “Courage is what it takes to stand up and speak; courage is also what it takes to sit down and listen” – Winston Churchill

        It helps that I am a good listener. =)

    1. My 15 HWW Post author

      Hi SMOL,

      When I first read this story (sometime back), I had initially thought that the willow would be the “winner” in the end since it knows how to 见风使舵. But alas…

      Strength is not knowing what cannot be done? Sounds like a dangerous weakness too. =p

      Can understand your tinge of disappointment but I hope I won’t have to bang against the wall or trip over a man-hole often too!

    1. My 15 HWW Post author

      Hi money honey,

      Thanks for the compliment (if I didn’t make a huge boo-boo and interpreted it the other way round).

      I still have much to learn.

  2. AK71

    Hi 15 HWW,

    Clarified your earlier blog post, this has.

    No more shocks from comments, I guess.

    Your views on emergency funds, I don’t detest.

    That I own a car, I hope you won’t protest.

    80% of my total income, I save.

    Let us be civil and pleasant, oh, behave! ;p

    1. My 15 HWW Post author

      Hi AK71,

      An interesting comment, I must say

      Really close to making my day

      My innocent blood, hope no one will bay

      Even if one thinks my views shouldn’t sway

      Because you’re making so much hay,

      Who I am to criticise your way,

      And finally,

      Due respect to you, I want to pay!

  3. Cory

    Classic Peer Pressure ! 😛

    It does take courage to pull back. And you did. Well done.

    An Emergency fund allows us to hold fast to our investment plan. Confidence is everything. You cannot afford to lose it therefore there’s always a need to have emergency fund locked somewhere.

    1. My 15 HWW Post author

      Hi Cory,

      Yeah, I did a re-think after the initial post. Even though nothing concrete has changed, it did highlight the importance of having some buffer in case things turn awry.

      On the point of confidence, it’s something that’s good to have and especially essential for our country to continue to thrive.

  4. Musicwhiz

    Perhaps it was just the way it was defined, but it seems you did have some form of “emergency funds” after all!

  5. SG Young Investment

    Wow, its interesting just reading all the comments. Your post has attracted all the seasoned financial bloggers here

    15HWW, we’e definitely new in this blogosphere(if there’s even such a word LOL). I always say i got so much to learn from all of them :p

    Good job and keep going on.