Emergency Fund

[Annie M.]

How much ang Price range ng EF niyo?

Ok na ba yung 100k?

depende sa monthly expenses mo, sis. parang ang recommended is 3 to 6 times your basic monthly expenses. so kung ang gastos mo 50k monthly, ang ideal emergency fund is 150k to 300k. kung 20k monthly lang ang gastos mo, okay na ang 60k to 120k.

I like the UITFs in BPI because they have zero holding periods. And in case you need the money, you can redeem shares from anywhere and anytime online and it'll be withdrawable the next day. I don't know if other banks offer the same in their UITFs -- I haven't looked into it.

sis ikaela, mga ilang percent ng emergency fund mo ang nakalagay sa BPI UITF?

[ikaela]

^0%, because they never let me open an account! I do like their UITFs, pero kahit type ko sila, sila hindi ako type. Oh well.

[kaiz]

^bakit sis?

[caterpillar-girl]

Hi sis ikaela, kami rin ng husband ko thinking of putting EF sa BPI direct save up for their free insurance. Why do you say it's not enough to rely on that for our insurance? Thinking of getting Manulife term if thats the case.

[Annie M.]

^0%, because they never let me open an account! I do like their UITFs, pero kahit type ko sila, sila hindi ako type. Oh well.

ay bakit daw, sis? may restrictions? do you live abroad?

[ikaela]

Oh, there was just something always wrong with their system, they can't seem to link my old account to the investment account. Yun lang naman. I have to find time to go back to my home branch for that.

Caterpillar-girl: because it's an inefficient way of getting life insurance. You need 50k to sleep in that account to get a 250k-500k coverage. 50k that could otherwise be working for you and making money for you. Meanwhile, a 30-year-old can get the same coverage in a yearly renewable term life insurance for around 3k.

If you can let a big amount of money sleep and if you are uninsurable, then the life insurance with the Direct Save-Up might be a sweet deal.

[ayrise]

Hi Sis Ikaela .. wow that's a good suggestion so if i have a BPI Account i can just transfer my money (online) from my UITF to my savings account and withdraw them?


sis nathanielle .. sis ikaela is right , if you dont have a proper life insurance better get one .. either Term Insurance or VUL especially if you've got kids or planning to have one. there is a thread for Term insurance and i think Sun Life for VUL or another thread for VUL.  better get it while your younger

[cussler]

Emergency fund should be put in an ATM account. That's why it is called Emergency Fund so that anytime we need the money we can get right away anytime and anywhere.

[caterpillar-girl]

Thanks ikaela. I'm just a little iffy about putting our entire emergency funds on an investment vehicle that's market dependent. I'm not a super conservative investor, but shouldn't at least SOME funds, particularly EF, be just purely in a savings account? But I'll think about it some more.

[Lianne@TheWiseLiving]

Hi sis ikaela, kami rin ng husband ko thinking of putting EF sa BPI direct save up for their free insurance. Why do you say it's not enough to rely on that for our insurance? Thinking of getting Manulife term if thats the case.

Hi sis. Sis ikaela is correct. Also, there's the possibility that if you withdraw everything, then you can't take advantage of the "bonus" life insurance anymore, since BPI Direct's insurance coverage is dependent on the balance of the savings account that you have, right?

Thanks ikaela. I'm just a little iffy about putting our entire emergency funds on an investment vehicle that's market dependent. I'm not a super conservative investor, but shouldn't at least SOME funds, particularly EF, be just purely in a savings account? But I'll think about it some more.

It all depends on your preference sis. Personally, it's also good to have at least some funds sleeping in a savings account. This way, liquidity is guaranteed and accessibility is easy. After all, it'll be for emergencies. 

[cussler]

i agree to ms lianne@thewiseliving, EF should be in Savings.

[Annie M.]

In my case, hubby and I kept 400k in a high-yield savings account as our emergency fund. Yung supposedly "high-yield" na yun,  1% lang ang interest per annum. And you can only withdraw 3 times per quarter. Pwede na rin, compared naman to regular savings.


 

[cussler]

@ Annie M. EF should only be widrawn in case of emergency and you can withdraw it anytime. 400K is a very reasonable or good amount for an EF. What IF lang ha. A typhoon came and some part of  your house has been damage and you need to fix it right away. You have already withdraw 3x in the current quarter but the quarter has not yet ended. Can you still withdraw or wait for the start of the next quarter?

[Annie M.]

@ Annie M. EF should only be widrawn in case of emergency and you can withdraw it anytime. 400K is a very reasonable or good amount for an EF. What IF lang ha. A typhoon came and some part of  your house has been damage and you need to fix it right away. You have already withdraw 3x in the current quarter but the quarter has not yet ended. Can you still withdraw or wait for the start of the next quarter?

Hopefully this never happens. Pero in case, ang pagakintindi ko you can still withdraw, kaso may fee. Baka kung ano mang 1% interest ang kitain, parang kakainin din lang ng fee.

[ikaela]

Thanks ikaela. I'm just a little iffy about putting our entire emergency funds on an investment vehicle that's market dependent. I'm not a super conservative investor, but shouldn't at least SOME funds, particularly EF, be just purely in a savings account? But I'll think about it some more.

Lianne is right, sis, it depends on your preference and how prone you really are to emergencies. I do have some funds in cash because as I said, the society I move in is still very much cash-based.

I'm fine having some of my money in liquid cash form up to a certain point, but beyond that, I am already uncomfortable seeing my hard-earned money doing nothing and just gathering dust in a savings account.

Hi Sis Ikaela .. wow that's a good suggestion so if i have a BPI Account i can just transfer my money (online) from my UITF to my savings account and withdraw them?

Yes, BPI lets you transfer money to and from your investments with them online. Here's one blogger's experience where she says that if you redeem before the cutoff time, you'll get your funds the next day: http://thethriftychickonline.blogspot.com/2013/01/another-reason-to-love-bpis-uitf-part-1.html

[ayrise]

sis ikaela  - thanks sa reply. you mentioned about the BPI Direct Save up being suitable for an 'uninsurable' person , may i ask can you explain this further? kasi i want to help a friend to get an insurance sana kahit he cannot be insured anymore (due to terminal illness).  so if you sign up for the BPI Direct Save up wala nang medical questions?


mga sis .. does hospitals accept Credit Cards? i'm thinking of adding CC as part of my Emegency Fund Pool of Resources ..  TIA sa mga magrereply 

just to share - my plan is 35% saved as UITF ( low risk.. i just want to earn kahit konti instead of sleeping in the bank)  65% savings account - split into 2 atm account - one is with my mom (Manila) and the other is with me (Overseas).. with this i want to add CC and of course this will not be used and strictly for Emergency.

[chicafabulosa]

Yes sis so far. Most hospitals now accepts major credit cards.

[ikaela]

^^Yes, sis, wala na medical exam yung life insurance with BPI Save-Up since it's group life insurance. There are a few restrictions, though. Like if you're bedridden or in a hospital/clinic due to sickness/disabilty when you open an account, the life insurance coverage will only start after you've been discharged and fully recovered. There is also a one-year period of contestability, which, to your terminally ill friend, means that if he dies within a year after opening an account, there will be no coverage. After one year, it's all clear. Even suicide will be covered.

You can read the general provisions of the master policy here: https://www.bpiexpressonline.com/others/SaveUp_Prov.htm

[ikaela]

Madami mga advisor diyan na nagsasabi na wag gawin emergency fund ang credit card, but I don't agree. Well, my credit card is not my first line of defense -- it's actually a bit down the line -- but in dire and urgent situations, it can really help.

This post by sentry on PEX explains it the best (this is also how I categorize emergencies and funds that may be required): http://www.pinoyexchange.com/forums/showthread.php?t=720760&p=70718815&viewfull=1#post70718815

"1. URGENT (within the day availability) - SMALL CASH NEEDED (i.e. accident):
at least 3 months worth of our expenses are in savings banks

2. SEMI-URGENT (within the week/month) and/or BIG CASH NEEDED (i.e. job loss)
the other 3 months in managed funds - you may gain, or lose though but risk is medium

3A. WORST CASE SCENARIO - SEMI-URGENT (within the week/month), VERY BIG CASH NEEDED:
i may consider cashing in some investments like stocks (you may incur significant loss but emergency is emergency and this is worst case scenario already)

note: this is why in investments, i also take note of the liquidity, and try to balance so i wont end up with near-100% illiquid investments (i.e. 100% in real-estate)

3B. WORST CASE SCENARIO - URGENT (within the day/week/month), VERY BIG CASH NEEDED:
the alternative is to use credit cards or credit lines. this is if cashing investments will incur huge loss (i.e. during economic downturn). expect to incur significant loss due to credit interest, but at least it will buy you time, as against cashing in investments and incurring loss immediately.
the risk here is falling into debt trap.

4. WORST CASE SCENARIO - NON-URGENT (within 6 month), VERY BIG CASH NEEDED:
consider to cash in real estate properties.

note that the worst case scenarios (3-4) are sometimes not considered financial decisions anymore, but personal ones, and you may be willing to accept financial drawbacks over personal loss (i.e. the life of your child is at stake)"

[ayrise]

very helpful and post mo sis ikaela!  tama nga na iba iba scenario ang haharapin natin na emergencies at minsan yung pera na kailangan natin either bukas na or 2-4 months from now kailangan so dapat talaga allocated ang mga fall back natin na funds.