6 month emergency fund

[BOOKEMDANO]

Hello all, 

 

I have always read that saving a 6 month fund is worthwhile, but never took that advice seriously until now. Given the current situation, I suppose. 
 

I have a target in mind, 500,000 baht, and working toward that figure at a slow and steady pace. Not before time, many of you may say. 
 

My question is, might it be better to keep a % in the home country, and the remainder here in Thailand? Currently the UK bank I use offers 0.75% AER/Gross fixed for 12 months. Thai banks I am not sure about? 
 

I do speak with a number of friends and colleagues here, and I am surprised how few of them actually have an emergency fund, so to speak. They may have other means of security elsewhere, but seldom have a 6 month reserve. 

Edited June 26, 2020 by BOOKEMDANO

[Rotweiler]

WAY too little.  Think real problem - and the cost to fix it.  I suggest a TH emergency fund of B2 Million with and equivalent amount in your home country. 

 

Any less is dangerous.

 

A North American living in TH (what he though was permanent) gets a rather mild yet damaging stroke.  Cost?  1.6 Million.  No time to head back to his home country; cannot wait the waiting period; stuck.

[stouricks]

I was taught by my Mum nDad to 'save for a rainy day', which over my working life I did. Just wish it would rain here now so I can dip into it!   PML

[Ventenio]

forget 6-months.....worry about RETIREMENT:

 

Retire at 50...live to be 90.

 

40 x 12 x 40,000 is 19,200,000 baht.  Is it enough?  maybe, maybe not.  

 

or, if possible, keep your main house paid off, rent, then sell it when needed.  

 

 

[stouricks]

1 minute ago, Rotweiler said:

WAY too little.  Think real problem - and the cost to fix it.  I suggest a TH emergency fund of B2 Million with and equivalent amount in your home country. 

 

Any less is dangerous.

 

A North American living in TH (what he though was permanent) gets a rather mild yet damaging stroke.  Cost?  1.6 Million.  No time to head back to his home country; cannot wait the waiting period; stuck.

Or he should have taken out a good Health Insurance policy.

[BOOKEMDANO]

I have a decent medical plan (I think) with Pacific Cross. Haven’t (luckily) had to use it for an emergency yet. 
 

I also continue to contribute to paying taxes in the UK, which may, or may not, entitle me to free health care in the UK if it comes to that. 
 

I do have other investments, but just not an emergency fund. 
 

Of course retirement planning is important too, but that’s a different topic. 

Edited June 26, 2020 by BOOKEMDANO

[bkk6060]

22 minutes ago, Ventenio said:

forget 6-months.....worry about RETIREMENT:

00Retire at 50...live to be 90.

 

40 x 12 x 40,000 is 19,200,000 baht.  Is it enough?  maybe, maybe not.  

 

or, if possible, keep your main house paid off, rent, then sell it when needed.  

 

 

Your example is ridiculous but probably a reason many do not have enough money.

Your total leaves approx. $600,000 US dollars to last 40 years?

Ever hear of inflation?

It truly needs to be invested properly and buying property here I do not believe will provide enough appreciation or income to live a comfortable/quality life.  It certainly would not for me.

And, that 40,000 a month not invested at all will have a value of about 5,000 in 40 years.

Edited June 26, 2020 by bkk6060

[Sheryl]

He hasn't asked about retirement or health insurance. He has insurance  and is just additionally wanting to have a cash emergency fund.

 

OP I would keep at least part of it in Thailand. For the remainder up to you to which country you keep it in as long as, if in UK, you can readily transfer it.

[treetops]

2 hours ago, Sheryl said:

He hasn't asked about retirement or health insurance. He has insurance  and is just additionally wanting to have a cash emergency fund.

I'm glad somebody spotted that.

 

OP - I've always been told between 6 months and a year, and now is the time that some are wishing they had it.  Keep it in your "home" currency, wherever that may be, and don't think about interest rates at the moment.  Always top it up by inflation however.

[tiocfaidh]

I am in UK atm.

With the pound is threatening to drop below 38 baht and the potential no-deal brexit it will drop further i do not want to exchange £ for THB.

What I am doing is investing in buy to let property in UK, as the market drops over the next 2 years.

Then I have an income for retirement in Thailand.

I already own a condo and vehicles in Thailand, so low overheads fir my retirement.

[BOOKEMDANO]

1 hour ago, tiocfaidh said:

I am in UK atm.

With the pound is threatening to drop below 38 baht and the potential no-deal brexit it will drop further i do not want to exchange £ for THB.

What I am doing is investing in buy to let property in UK, as the market drops over the next 2 years.

Then I have an income for retirement in Thailand.

I already own a condo and vehicles in Thailand, so low overheads fir my retirement.

Good idea. 

I also considered 'buy to let' options as the property market looks set to drop, as you say. Would be hard to secure a buy-to-let mortgage by myself now though. Good luck with that anyway. 

Going back to the point you made about exchanging pounds for baht, I agree that wouldn't be the best move now. It does look likely to drop further with a no deal Brexit looming. However, exchanging baht into pounds and moving this into a fixed savings account in the UK could be a good move. 

For example, the more the (£) pound drops off gives me more bang for my baht, therefore boosting the 'emergency fund', plus the added advantage of that 0.75% AER/Gross interest rate back home, too. 

Is moving baht into the UK a good idea now? Possibly.. 

Will I keep some of that emergency fund here in Thailand. Yes I will. 

Edited June 27, 2020 by BOOKEMDANO

[BritManToo]

1 hour ago, tiocfaidh said:

What I am doing is investing in buy to let property in UK, as the market drops over the next 2 years.

Then I have an income for retirement in Thailand.

Brilliant idea ......... at a time when renters don't have to pay rent, and you can't evict them.

Do you really think this won't keep happening?

[Trillian]

1 hour ago, tiocfaidh said:

I am in UK atm.

With the pound is threatening to drop below 38 baht and the potential no-deal brexit it will drop further i do not want to exchange £ for THB.

What I am doing is investing in buy to let property in UK, as the market drops over the next 2 years.

Then I have an income for retirement in Thailand.

I already own a condo and vehicles in Thailand, so low overheads fir my retirement.

There's not much profit to be made any more by being a landlord unless you own mortgage free property in a high rental income area such as Central London, trust me, I know! By the time you deduct the cost of insurance, accountancy, management fees, taxes, service charge, council tax and utilities charges during vacant periods along with maintenance and repair, you should have enough for a bag of crisps, if you're lucky.

 

But about your funds.....keep 50% in each country and rebalance once a year or when there is a favorable exchange rate event. 

[rwill]

I think your 500K target is fine for a 6 month emergency fund.  You could live on that much longer if you were frugal.  Of course that depends on whether you have a lot of debt or not too.  Probably best if you are staying here long term is to put it in a fixed deposit account in a Thai bank. Easier to access and don't have to worry about exchange rate fluctuations.  But the FD rates have been dropping quite a bit lately.  You could do as you suggest and split it between Thailand and your home if the rates are better there.

[Pravda]

I don't want to sound obnoxious, but 500k is peanuts.

 

Meaning 500k equivalent in your home country would probably be enough, but here it is one bog fat nothing.

 

 

 

 

[Bender Rodriguez]

16 hours ago, Rotweiler said:

WAY too little.  Think real problem - and the cost to fix it.  I suggest a TH emergency fund of B2 Million with and equivalent amount in your home country. 

 

Any less is dangerous.

 

A North American living in TH (what he though was permanent) gets a rather mild yet damaging stroke.  Cost?  1.6 Million.  No time to head back to his home country; cannot wait the waiting period; stuck.

 

ever heard of HEALTH insurance, or does thai health insurance not cover stroke ?

[DFPhuket]

With interest rates so low, I'm not sure that it matters a whole lot where you keep it. By definition, an emergency fund money should be easily accessible so that you can get to it in an emergency. My vote would be to keep in the country where you are or, if you want to keep it somewhere else, make certain you can rapidly get to it via a ATM or electronic transfer. 

 

The only way to know how much you should have in the fund is to figure out your monthly expenses. That can vary wildly from person to person. 

[ianezy0]

OP, as you say, you have medical insurance plus other investments so an emergency fund of 500k baht sounds fine.

I guess it depends on what you are classing as an emergency if your health is already covered?

[Trillian]

1 hour ago, Pravda said:

I don't want to sound obnoxious, but 500k is peanuts.

 

Meaning 500k equivalent in your home country would probably be enough, but here it is one bog fat nothing.

 

 

 

 

That's a very decent, well above average income for a Thai person, it's easily possible to live very well on it, 41k per month.

[wwest5829]

18 hours ago, bkk6060 said:

Your example is ridiculous but probably a reason many do not have enough money.

Your total leaves approx. $600,000 US dollars to last 40 years?

Ever hear of inflation?

It truly needs to be invested properly and buying property here I do not believe will provide enough appreciation or income to live a comfortable/quality life.  It certainly would not for me.

And, that 40,000 a month not invested at all will have a value of about 5,000 in 40 years.

Hmm, “knock on wood” fortunately for me your scenario is not working out that way. Having a net invested 500k meant I could afford a rusting out trailer in the US for retirement or ... Or I could retire in a lower cost country like Thailand where I can live comfortably in a 4 bed, 3 bath home, have a motorbike and car for about 65,000 baht a month. Fortunately, thus far, my US Social Security of $1306 being matched with funds drawn against the cited net worth. Thus far, the net worth, due to value growth has maintained the net worth balance above 500k (yes I have taken a hit in the stock market from the beginning of 2020).

[natway09]

I do know that I would not be betting on the GBP strengthening for 10 years.

They are in a real mess 

[Krataiboy]

I could do you a favour. Still got a bit of room left under my mattress.

[RichardColeman]

6 hours ago, tiocfaidh said:

What I am doing is investing in buy to let property in UK, as the market drops over the next 2 years.

You will need to set up and emergency fund for your emergency fund I think - plan on 25-30% of your property not getting rent on it at any one time , being empty or rent just not being paid by the tenant ! And for repairs for the damage you will undoubtedly get.

 

As for the market dropping , I seriously think that is not happening in any way that is going to give you a huge portfolio at a discount price

 

 

 

[scubascuba3]

5 hours ago, BOOKEMDANO said:

Good idea. 

I also considered 'buy to let' options as the property market looks set to drop, as you say. Would be hard to secure a buy-to-let mortgage by myself now though. Good luck with that anyway. 

Going back to the point you made about exchanging pounds for baht, I agree that wouldn't be the best move now. It does look likely to drop further with a no deal Brexit looming. However, exchanging baht into pounds and moving this into a fixed savings account in the UK could be a good move. 

For example, the more the (£) pound drops off gives me more bang for my baht, therefore boosting the 'emergency fund', plus the added advantage of that 0.75% AER/Gross interest rate back home, too. 

Is moving baht into the UK a good idea now? Possibly.. 

Will I keep some of that emergency fund here in Thailand. Yes I will. 

Exchange rates are difficult to predict, I wouldn't switch now it isn't clear what way it will go.

 

As for emergency fund, i never had 6 months as such, more years, i always invested and saved incl starting a pension at 18. The earlier you get into saving the better, it's amazing how many people can only survive a month or two without working. My advice is live below your means and save money, and invest in property and\or stocks and shares as appropriate

[Max69xl]

19 hours ago, Rotweiler said:

WAY too little.  Think real problem - and the cost to fix it.  I suggest a TH emergency fund of B2 Million with and equivalent amount in your home country. 

 

Any less is dangerous.

 

A North American living in TH (what he though was permanent) gets a rather mild yet damaging stroke.  Cost?  1.6 Million.  No time to head back to his home country; cannot wait the waiting period; stuck.

You don't have to come up with a worst case scenario. That's just scaremongering. Suggesting a need of 2 million baht in a bank as an emergency fund is ridiculous. Having a proper insurance together with some money in the bank is a better advise. 

[BOOKEMDANO]

27 minutes ago, natway09 said:

I do know that I would not be betting on the GBP strengthening for 10 years.

They are in a real mess 

Yes you could be right. If the baht remain overvalued in a decades time against the pound, then I may just as well continue to take advantage of that fact and top-up my savings account then in the UK. 
 

13 minutes ago, scubascuba3 said:

Exchange rates are difficult to predict, I wouldn't switch now it isn't clear what way it will go.

 

As for emergency fund, i never had 6 months as such, more years, i always invested and saved incl starting a pension at 18. The earlier you get into saving the better, it's amazing how many people can only survive a month or two without working. My advice is live below your means and save money, and invest in property and\or stocks and shares as appropriate

Absolutely right: The more the better. 
 

I too am surprised at how many colleagues of mine would be in dire straits after only 2 months of no income. 
 

This is why a 6 month cushion (more would be better) is necessary to maintain a current lifestyle until plan B arrives. 

 

1 hour ago, ianezy0 said:

OP, as you say, you have medical insurance plus other investments so an emergency fund of 500k baht sounds fine.

I guess it depends on what you are classing as an emergency if your health is already covered?

True! 
 

definitions of what ‘emergency’ and ‘emergency fund’ differs from person to person. 
 

I see this as if I were to lose my primary income, this ‘emergency cash fund’ is there to provide me time enough (6 months worth) to get back on my feet, as it were, without the need to touch others investments. 
 

 

[Lacessit]

I'm thinking a year ahead. I have a 500K emergency fund, plus enough funds in baht for a year's expenses here. The lockdown has reduced my cost of living, as I can't travel. I keep about 80% of my money in Australia. Totally out of the sharemarket, IMO it's a bubble heading for a monster correction.

[tiocfaidh]

6 hours ago, BritManToo said:

Brilliant idea ......... at a time when renters don't have to pay rent, and you can't evict them.

Do you really think this won't keep happening?

All my tennan's pay their rent so yeah, it is a good time. Stamp duty is the problem but you just need to think long term. 

[khunPer]

19 hours ago, BOOKEMDANO said:

My question is, might it be better to keep a % in the home country, and the remainder here in Thailand? Currently the UK bank I use offers 0.75% AER/Gross fixed for 12 months. Thai banks I am not sure about? 

I have an emergency fund here in Thailand, and access to some money in my home country also, either via Internet banking, or via a choice of two generally used plastic cards – i.e. Visa and Mastercard – the latter can be used for instant shopping of air ticket or like with about one month credit, before it's withdrawn from my home-country bank account; and it also includes a travel insurance from the moment I leave Thailand if the tickets has been bought with Mastercard.

 

Even you have a health insurance, there might be cases where cash, or extra funds, are needed. My concern was, what if something happens to me, so I cannot get access to my emergency funds? Therefore I decided to place the majority of my emergency funds shared with my trusted girlfriend, so she always can get some fairly instant cash on my behalf, and even her mother has an ATM to one account, in case something happens to both of us – we have a child together – but a solution like that is of course a question of trust, or calculated risk.

 

For deposit I have the funds split into three accounts. Some money in a normal savings account with ATM card for instant access. Some money in a 12-month fixed deposit account for better interest, but the money can be withdrawn at any bank-day with loss of interest from the ongoing last period. And some funds placed in a low-risk so-called "Fund Book" for best interest; funds can be sold on bank-days and will be available in the ATM-account within one to three bank-days.

 

The ATM account used to pay up to 0.50 percent interest a year – "used to" as the present pandemic situation might change what we have been used to – the 12-month fixed deposit use to generate around 1.50 percent a year, the last prolongation was set at 1.60 percent; and the fund book generates a similar, or slightly higher, gain per year as the fixed deposit account, it's not an interest, funds are sold at market value.

 

Funds in a Thai bank account are guaranteed by the state up to a certain amount, however decreasing annually and will end at 1 million baht. So if you keep not more than 1 million baht in a Thai bank, you should be as safe as in most home-country's banks; eventually split the money between more than one Thai bank. However, Fund Books are not covered by a guaranty, it's a mutual fund investment product.

 

In all I have little more than 50 percent of my total annual budget in the shared emergency accounts, the split between the different accounts is a matter of personal valuation. I furthermore have some extra savings in my own name only, so in total I have enough accessable funds in Thailand similar to about one year's budget. Again, it a question of personal evaluation of what might be needed, or safe to have access to, and what one can afford to set aside. Living in Land-of-Smiles it's always wise to have access to some level of emergency cash in a "rainy day account"; even a small amount can be "big money" in certain situations...????

[garygooner]

20 hours ago, Ventenio said:

forget 6-months.....worry about RETIREMENT:

 

Retire at 50...live to be 90.

 

40 x 12 x 40,000 is 19,200,000 baht.  Is it enough?  maybe, maybe not.  

 

or, if possible, keep your main house paid off, rent, then sell it when needed.  

 

 

I have absolutely no wish to live to be 90!