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SDS (Seductive Dividend Stocks)
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Sorry I hide my true identity but I'm a physicist/engineer, native contrarian and idea generator. I am an eclectic dividend investor with motto "In God We Trust, All Others Pay Cash" applied to companies I invest in. I like to read /and read a lot - did you look on my SA photo 8-)? /... More
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  • Your Cash Emergency Fund 3 comments
    Feb 5, 2014 11:41 PM

    There is some discussion on cash emergency fund in different SA comments. I suggest the following simple schedule for my fellows based on probability to find new job if you fired (well we have age discrimination in USA) and probability to get sick for long-time exceeded disability benefits (also age-dependent):
    Age 25 - have 0.5 year of spending (calculate average of last 3)
    Age 40 - have 1 year of spending (calculate average of last 5)
    Age 50 - have 2 years of spending (calculate average of last 5)
    Age 60 - have 3 years of spending (calculate average of last 5)
    Keep 3 years until age when you get Social Security/Pension. Reduce to 3 years of spending minus your annual Social Security/Pension (assuming they will not default) as soon as you get.
    Of course increase gradually your cash emergency fund between ages indicated above.
    Of course make adjustments for kids.
    Of course increase gradually your cash emergency fund based on inflation and your real annual spending.

    Please remember that I'm not a financial adviser, so do your DD.

    5 Feb 2014

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Comments (3)
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  • mbn
    , contributor
    Comments (528) | Send Message
     
    Your estimates based on time-frames is reasonable, especially for the younger folks in this economy. Jobs may be difficult to find easily, so having a cushion is always good.

     

    I know of guys, married, in their 30s, who have 2 years of an emergency fund in the bank, or money market funds. And I know folks in the same boat, but in their late 50s or early 60s who have less than a year in an emergency fund.

     

    It all depends on the comfort level of the individual (and his family).
    19 Feb, 01:32 PM Reply Like
  • SDS (Seductive Dividend Sto...
    , contributor
    Comments (3479) | Send Message
     
    Author’s reply » "It all depends on the comfort level of the individual" - agree if the level is reasonable above 0 (some folks have huge debt and almost no cash)
    SDS
    19 Feb, 03:25 PM Reply Like
  • mbn
    , contributor
    Comments (528) | Send Message
     
    Huge debt and little or no cash is all wrong. Hopefully folks in that unfortunate situation will control their spending habits and get back on track pronto.
    20 Feb, 08:35 AM Reply Like
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