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March 07, 2007


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I do not have an emergency fund as such. This is deliberate decision based on:

1. two incomes (neither of which have taxes deducted at source) both with are reasonably secure;

2. liquid assets that could be sold off if needed;

3. ungeared property that could be pledged if necessary.

With interest rates at such low levels in Hong Kong that deposits carry negative real returns, an emergency fund is a bad investment for me.

I purposely don't have an emergency fund either.

Although it's not a great reason, but like traineeinvestor, we have two incomes, either of which are enough to run our household (and then some).

However, we each have home equity line of credits that we can draw on for real emergencies. Some may say that we risk losing a home or something like that, but we have savings in well diversified mutual funds that we could draw on.

So if every industry in the US and most industrialized nations outside of the US were to have problems those investments would be in trouble. Also employers would have to decided they didn't software engineers and pharmacists. And lastly, the the housing market would have to tank on top of it all for it to be a big problem.

Even in the US the interest rates are too small to battle inflation and taxes and be considered any kind of "investment." I'm against tying up all that money not making any more money for something that has a 1 in a billion chance of happening.

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