Quote from: Troytech on Today at 09:38:14 AM

Quote from: JayJuanGee on Today at 02:23:12 AM

Quote from: teamsherry on Today at 12:42:15 AM

Quote from: JayJuanGee on April 03, 2024, 10:49:12 PM

Many times emergency funds are form of cash that are very liquid but they may well not be earning any interest or gaining value, so there could be some sense that those funds are neither working for you and that they might be losing value as fast as you can build them up, so in that sense, you might have quite a bit of hesitancy in holding very much value in cash and/or cash equivalents,

I was considering a possibility where we can store our emergency funds in other asset that could retain the value we put in it,

There is nothing really wrong with those kinds of conclusions - except for a realization that emergency funds tend to be denominated in the fiat in which bills are paid because assets can suffer liquidity events at the same time, then you are fucked because everything might be going down in value at the same time, and you are forced to sell some things because you did not have enough cash. Think about what happened March 2020 as an extreme example, but it is still an example of something that could happen and you would not want to be caught on the wrong side in which you had to sell either your assets and/or your bitcoin at a time that they had just taken around a 50% or more draw down in a day and with no clarity in sight when they were going to stop going down.....

so sometimes if you are going to end up wanting to be cute in regards to making sure that your various kinds of emergency funds, reserves and/or float is working for you while in storage for a long time, is that you would still have the first 3 months or so in cash or cash equivalents that are easy to draw upon, maybe in a combination of physical, in banks, in other kinds of accounts that may or may not be interest bearing.

When shit hits the fan, you have to largely be prepared already in advance to be able to weather through the situation... maybe the bad situation only lasts a month or two, or maybe it ends up lasting several months, even 6 months or more, and so there might be some point in which you are also looking at your bitcoin as one of your forms of liquidity that you need something and you are running out of resources, and surely there could be cases in which you are in that situation, and maybe there could have had been ways that you could have better protected yourself.

Maybe I can give my own example?

Through 2017 and early 2018, I had been planning for some construction that I knew was going to cost a certain amount that was probably equal to 3-5% of the value of my then BTC stash, and so I had set aside about half of the expenses that I had calculated were boint to come due in January, February, March and April 2019.

As we likely realize throughout 2018, BTC spot prices went down from around $19,666 and down to a low of around $3,124, so throughout 2018, I was buying BTC on the way down with my designated cash and keeping in mind my construction cost bills were coming due in early 2019 - yet what ended up happening is there were higher costs than expected and the bills started coming due in October, November and December 2018, so really a few months earlier than expected.. and .. so there was some point around November 2018, that I was getting close to running out of cash from all of my various sources, and I ended up selling around 3.5% of my then BTC holdings (at various prices in the $3,800 to $4,200 range), and maybe over the next several months I ended up buying back around 50% of what I had sold, yet the overall lesson was that I had made a mistake in properly planning and maintaining enough funds to both cover all of the extra expenses but also to sufficiently prepare for the level of the BTC price drop that ended up playing, which largely likely meant that I was buying back way too much BTC on the way down from $19,666 to $3,124 and I should have had held more of those cash reserves (that were dedicated towards buying bitcoin) in my cash reserves that should have had been dedicated for paying for my construction expense.

So, the punchline is that due to my errors, my lack of properly keeping enough cash on hand, there remains a certain quantity of my BTC that I ended up selling in the price range between $3,800 to $4,200 that I was not able to buy back.. which probably was around 1-2% of my then BTC stash that was not able to be bought back.. .. except, I suppose later that I probably ended up buying some of that back at higher prices.. but even that is not really clear in terms of whether my BTC stash might have had ended up being forever reduced by 1-2% because of the price point in which they were sold and the fact that BTC prices were near bottom prices.. so ultimately it was a mistake of selling low rather than selling high.. and then never being able buy back at lower than the sell point (except for my mentioning that about half of it did seem to have had been bought back, so instead of shaving off 3-4% of my BTC stash the end result was only 1-2% of my BTC stash having had been shaved off.

After taking much thoughts on this and yeah considering the fact that @teamsherry is trying to find a way to keep inflation out of her cash and also your explanation here I don't think it's worth the risk to put your emergency funds in any asset, most asset suffer liquidity and volatility and even the most stable of them like gold can at times also have price fluctuations and Idea of an emergency fund is availability and always ready to use when emergency occurs, like from your experience when you bought much bitcoin because you felt you wouldn't be needing the money in such a short period of time and it wasn't your fault but life happens and things never go as planned and you ended up selling some of your bitcoin to pay for the construction expenses.

And if it was a person still in his accumulation stage that were to be in such situation, it would have resulted in him potentially losing all his asset to pay off such bills.

With all this put together I think your right and it's better to have our emergency funds in cash, we have also been making our decision here based on risk ratio and how certain the an event would occur and when it comes to emergencies we never know when it would happen and we should be always prepared for such since its our insurance that our bitcoin investment stays working and we don't have to touch it prior to its maturity, so certainly having cash reserves around is necessary to our investment, but what's to worry if our bitcoin investment keeps on doing well then it's possible that it could cover for the cash that is suffering inflation and has not been working.

Well said, there's thistobsay, emergency funds are supposed to be readily available and should be as stable as possible,as having them in cash doesn't imply any interests or actual appreciations, but at a fixed price....still to hit the basics and have it readily available, I don't think it's best to have emergency funds in assets, as they can suffer fluctuation and some other factors that can really really bar the readily available thing. What I'm saying here is, most of the ways to add value to emergency funds (aside literally increasing the amount, by allocation), are really volatile.