'Do I have an Emergency Funds available?'
The answer is, Yes. I do.
I've also indicated this at the bottom of my page on 'Portfolio':
Portfolio you see here does not include emergency funds, CPF funds or any other form of money required for daily expenses. Funds/equities here are purely my investment portfolio which I've established when I'm 19 years old back in 2017. Also, should the market evaporate completely, I will not starve because of what that is here.
The keyword is 'starve because of what that is here'
It's definitely not pleasant to go through this sticky situation twice after 2016.
Read: Polytechnic Student with $3.63 as Net Worth - 1 Year Later
If you are going to starve because of your investment in big financial events such as GFC or losing sleep because the counter you've bought is going south, it's very likely that you are overly-invested in the market.
While I will not talk about how good/bad having an investment is. Neither will I talk about the need to have one. The most important thing is to have a peace of mind, regardless of what you do.
Personally, I feel that the emergency funds provides me with a safe level of comfort, which gives me a peace of mind when being invested. This has allowed me to sleep easier at night too.
One can definitely argue about the need to have an emergency fund available to you when credit cards and several options are readily available. Or even certain that you have no kids, no liability, still studying.. Why do you need it?
Remember the word there? Emergency Funds.
This means that this sum here is supposed to help you when there is an emergency. This emergency could be a sudden loss of income, illness or anything that demands an unexpected amount of expenses from you.
As a student, having emergency funds suggests to me that even if I do not work and my invested capital fully evaporates, I will not need to ask for dollars from my family even when my expenses account depletes totally.
I don't enjoy asking for dollars from my family and it had been a really long time since I last done so.
At least for 6 years, if I did not remember wrongly.
Yes, it applies to even when I have $3.63 as my net worth.
Fortunately enough, I had been working a little and my pay came in the very next day.
This taught me a very serious lesson.
Having this emergency funds available, it prevents me from starving and offers me a peace of mind.
At least for the duration that my emergency funds are able to sustain me and that I do not have income due to any reasons, I'm not having a big headache as someone who doesn't have one!
So, instead, ask yourself:
1. How much is your overall monthly expenses? (This includes mortgage, food, bills etc.)
2. What is your age and how 'long' of emergency funds will you need?
3. Most importantly, with that amount, will you be able to sleep in peace when you loses your income and investment evaporates completely?
4. No? Increase the amount by a fold.
5. Still no? Increase it by another fold. Repeat until you can sleep peacefully.
6. If you still couldn't sleep peacefully, it's time for you to reduce on your un-neccessary commitments.
Remember.. peace of mind is priceless.
It's important to be able to sleep in peace.
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Read: Peace of Mind and Emergency Funds. Really?
