Long term savings vehicle

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mintydroid

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I've been trying to identify a risk averse, liquid, savings vehicle. Money market is moderately safe with low interest earnings. It trades in the short term loan side amongst other things.

What else is there? Where do you guys keep your rainy day money?
 
I keep my money in property.

Difficult to grasp because your one criteria immediately flies out of the window, namely that the savings vehicle must be liquid. But the property I have is extremely liquid, properties sell in under a month here. They key is always location and I am earning a monthly rental on the property anyway.

Also if you want to save a million for example in a normal vanilla savings vehicle, you have to use your own money. if you want to save using a property, a bank is willing to give you the money right at the beginning. The return on property may be significantly lower than other vehicles, but there are tax savings, capital growth of the property and the fact you don't have to use your own money up front to purchase the asset.

Anyway just putting it out there, its what I do, but others may be a bit adverse to doing it this way.
 
saturnz said:
I keep my money in property.

Difficult to grasp because your one criteria immediately flies out of the window, namely that the savings vehicle must be liquid. But the property I have is extremely liquid, properties sell in under a month here. They key is always location and I am earning a monthly rental on the property anyway.

Also if you want to save a million for example in a normal vanilla savings vehicle, you have to use your own money. if you want to save using a property, a bank is willing to give you the money right at the beginning. The return on property may be significantly lower than other vehicles, but there are tax savings, capital growth of the property and the fact you don't have to use your own money up front to purchase the asset.

Anyway just putting it out there, its what I do, but others may be a bit adverse to doing it this way.
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Access bond?
 
Unit trusts seem like they would meet all criteria.
 
If your aim is purely a "rainy day" fund, then of your best options are money market funds or pumping the cash into an access bond. For slightly better returns, I sometimes advise people to invest in a "Multi Asset - Low Equity" fund for this type of savings as your returns over a long period will on average be higher than money market returns.

Once your rainy day fund has 3 months worth of expenses covered, you should start looking at higher risk/higher return investment options.
 
the eskimo said:
If your aim is purely a "rainy day" fund, then of your best options are money market funds or pumping the cash into an access bond. For slightly better returns, I sometimes advise people to invest in a "Multi Asset - Low Equity" fund for this type of savings as your returns over a long period will on average be higher than money market returns.

Once your rainy day fund has 3 months worth of expenses covered, you should start looking at higher risk/higher return investment options.
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Multi asset low equity sounds along the lines of what I'm thinking we. E.g. Balanced, stable funds?

I'm in the process of spreading smaller portions into high risk returns and short to medium term riskier investments .

Right now I've currently got money in the money market for quick access. It's defined as the least risky however I have lost money with the whole African bank incident. It's the money I actively save and use a portion of maybe once a year for major expenditures.
 
mintydroid said:
Multi asset low equity sounds along the lines of what I'm thinking we. E.g. Balanced, stable funds?
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Balanced Funds will have more equity exposure than stable funds, so be a bit more careful. Also depending on the Asset Manager, the word "Balanced" will have very different meanings, so it would be worthwhile to view factsheets.
 
I have no rainy day money, it all goes into an ETF and to work for me. Should the worst happen and I need cash before my next payday I'll have to sell some shares. It's quick to do. I would guess I could get the cash in about 48 hours.
 
patrick said:
I have no rainy day money, it all goes into an ETF and to work for me. Should the worst happen and I need cash before my next payday I'll have to sell some shares. It's quick to do. I would guess I could get the cash in about 48 hours.
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The issue is to find your rainy day money being less than what you invested when you need it.
 
Galactica said:
The issue is to find your rainy day money being less than what you invested when you need it.
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Property NAV's dropped drastically in the last month or so.

Maybe half into ETF or unit trusts and the other half in low interest account so all the money is not at risk and net return on the combined accounts may be achievable.
 
In my book there's no room for putting emergency funds into an ETF or any equity whatsoever. That's what cash (e.g. money market) is there for.
 
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I guess it depends on what you consider rainy day money. If you need it to purchase something, then surely it can wait. If it's for serious medical costs, the medical aid will pickup the bill. A broken geyser? Well if I don't have the cash the family is off to the gym every morning for a shower.

I do keep a reasonable amount in my FNB account to ward off bank fees, and I really can't think of anything else that would require more than that in less than 48 hours.
 
patrick said:
I guess it depends on what you consider rainy day money. If you need it to purchase something, then surely it can wait. If it's for serious medical costs, the medical aid will pickup the bill. A broken geyser? Well if I don't have the cash the family is off to the gym every morning for a shower.

I do keep a reasonable amount in my FNB account to ward off bank fees, and I really can't think of anything else that would require more than that in less than 48 hours.
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Nothing you can't sort out with the credit card should you need the money immediately and can't wait for 7 days or so.
 
Things like this often depend heavily on one's financial situation and self control.
I personally pump all my savings cash into ETF's unless I'll be needing it within <12 months, like for a holiday.
My CC is always paid off, and that's what I use to cover any rainy day expenses that weren't budgeted for in the month.. (I put savings aways as soon as I get paid).
I just subtract the CC payment from next months savings. Knowing I have my shares that can be used to cover any excessive amounts should the need arise.
 
nakedpeanut said:
Things like this often depend heavily on one's financial situation and self control.
I personally pump all my savings cash into ETF's unless I'll be needing it within <12 months, like for a holiday.
My CC is always paid off, and that's what I use to cover any rainy day expenses that weren't budgeted for in the month.. (I put savings aways as soon as I get paid).
I just subtract the CC payment from next months savings. Knowing I have my shares that can be used to cover any excessive amounts should the need arise.
Click to expand...

This. I also keep a small amount in a money market just in case but basically this.
 
patrick said:
I have no rainy day money, it all goes into an ETF and to work for me. Should the worst happen and I need cash before my next payday I'll have to sell some shares. It's quick to do. I would guess I could get the cash in about 48 hours.
Click to expand...

nakedpeanut said:
Things like this often depend heavily on one's financial situation and self control.
I personally pump all my savings cash into ETF's unless I'll be needing it within <12 months, like for a holiday.
My CC is always paid off, and that's what I use to cover any rainy day expenses that weren't budgeted for in the month.. (I put savings aways as soon as I get paid).
I just subtract the CC payment from next months savings. Knowing I have my shares that can be used to cover any excessive amounts should the need arise.
Click to expand...

Hamster said:
This. I also keep a small amount in a money market just in case but basically this.
Click to expand...

Which ETF's do you'll target for savings?
 
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