Unless OP is one of those 24 year olds with a mid six figure retirement portfolio already, their EF is probably a substantial percentage of their overall savings. Knowing that a huge portion of your savings are "safe" in cash should be enough to sleep well at night. Definitely more than having 5-10% of your very early accumulation retirement portfolio in treasuries.I'm not sure this is a useful comparison/evaluation.Do you have an emergency fund?Will I keep calm when there is a real bear market? I'm considering allocating 5% or even 10% to treasury now. Is this a good idea?
Reframe it by including the dollars in your emergency fund in your entire portfolio. What's your AA now?
The emergency fund's purpose is to cover expenses in the event of job-loss. The retirement AA (separate from the EF which should all be cash) is to prevent one from panic-selling and to avoid mental stress even if you don't panic as mental stress can lead to physical stress/harm (the "sleep well at night" attribute). I don't think the EF and retirement AA are related during the accumulation phase while one is still working. Having an adequate EF would seem to have no bearing on panic-selling because your retirement AA was more aggressive than your risk-tolerance (but if you get laid off, you'll still be able to cover the bills so it's ok that you panic sold?).
Statistics: Posted by Beensabu — Wed Aug 07, 2024 2:43 pm — Replies 9 — Views 1030