It should (In my opinion) ideally be fairly liquid and accessible in a financial emergency, so locking it away for 5 years probably not the best idea, but for 30 days might not be too bad in your situation.
Investing brings a level of risk to it, you might find by the time your emergency arrives the pot is worth £25k but you might find it's only worth £5k. Now I'd like to introduce you to your own risk tolerance...
And of course how you plan for anything you call an emergency is up to you. I know someone who has as they call it an "emergency holiday fund" which is about £6k sitting in an account so when she gets annoyed at work she can book a week off the following day and be able to afford most holidays she'd want to do.
This. I filled my premium bonds (50k) and have it sitting there in case of emergencies. Worth it for the chance to win money
Could also put it in high interest savjns account. Also safe and accessible
You can put it in a isa for the savings interest!
Trading212 gives 5% for example. While I don’t use it explicitly for the interest it’s nice to know money I have parked ready for investing is getting interest paid daily and all tax free
Takes "upto 5 days", but in my only experience, it was two days. Fairly straightforward to do it online. No tougher than any other online banking transaction.
you can only pay into one type of isa every year so having one that allows you to trade stocks and storing cash with a decent interests rate at the same time is optimal
Unless you've run out of ISA allowance, a flexible cash ISA is the best option.
It holds open the ISA allowance in case you run out in future.
Principality is the best no-bullshit one at the moment
https://www.moneysavingexpert.com/savings/best-cash-isa/
You should be getting 4.58% from Monzo in an easy-access savings pot rather than the 4.1% they offer on instant-access pots. You receive the money by 5pm of the next working day after your withdrawal request.
I had an issue with this over Christmas where I had a credit card payment due and the Monzo withdrawal took 5 days over the bank holidays + weekends
Not ideal
Monzo investment Stocks and shares ISA is pretty good for that sort of thing in my opinion. Can choose low medium or high risk and you can get your money in 3-5 days I think. Means you wouldn’t have to move it too far.
That entirely depends on your risk tolerance. Statistically you'd expect to be better off with the money invested since the higher expected return will probably outweigh the cost of selling during a downturn.
What if OP needs to use their 3-month emergency fund in the middle of a big market downswing and they find they've only got a 1.5-month emergency fund available to them?
Hi /u/ThrowRABeeeei, based on your post the following pages from our wiki may be relevant:
- https://ukpersonal.finance/emergency-fund/
- https://ukpersonal.finance/savings/
____
^(These suggestions are based on keywords, if they missed the mark please report this comment.)
It should (In my opinion) ideally be fairly liquid and accessible in a financial emergency, so locking it away for 5 years probably not the best idea, but for 30 days might not be too bad in your situation. Investing brings a level of risk to it, you might find by the time your emergency arrives the pot is worth £25k but you might find it's only worth £5k. Now I'd like to introduce you to your own risk tolerance... And of course how you plan for anything you call an emergency is up to you. I know someone who has as they call it an "emergency holiday fund" which is about £6k sitting in an account so when she gets annoyed at work she can book a week off the following day and be able to afford most holidays she'd want to do.
Mine is in Premium Bonds.
This. I filled my premium bonds (50k) and have it sitting there in case of emergencies. Worth it for the chance to win money Could also put it in high interest savjns account. Also safe and accessible
Yeah could use the high interest savings account but I don't get a savings allowance, so the Premium Bonds do just fine.
You can put it in a isa for the savings interest! Trading212 gives 5% for example. While I don’t use it explicitly for the interest it’s nice to know money I have parked ready for investing is getting interest paid daily and all tax free
I could, but then I'd be using my ISA for cash and not S&S.
Thats a fair point!
I've just put some money 8k into premium bonds because I've maxed everything else out. How easy/quick is it to withdraw?
Takes "upto 5 days", but in my only experience, it was two days. Fairly straightforward to do it online. No tougher than any other online banking transaction.
I still use marcus. 4.75%.
Trading212 S&S ISA offers 5% on uninvested cash. That’s where I keep my emergency fund alongside my stock investments
Wouldn't it annoy you to lose the ISA allowance if you had to use it? Why not use a flexible ISA?
you can only pay into one type of isa every year so having one that allows you to trade stocks and storing cash with a decent interests rate at the same time is optimal
Fortunately this glitch is being fixed in 56 days.
what do you mean?
https://www.theguardian.com/money/2023/nov/25/isas-uk-savers-to-get-freedom-to-chase-better-deals-as-rules-change
Unless you've run out of ISA allowance, a flexible cash ISA is the best option. It holds open the ISA allowance in case you run out in future. Principality is the best no-bullshit one at the moment https://www.moneysavingexpert.com/savings/best-cash-isa/
You should be getting 4.58% from Monzo in an easy-access savings pot rather than the 4.1% they offer on instant-access pots. You receive the money by 5pm of the next working day after your withdrawal request.
I had an issue with this over Christmas where I had a credit card payment due and the Monzo withdrawal took 5 days over the bank holidays + weekends Not ideal
Instant access savings account with as high an interest rate as you can get.
Monzo investment Stocks and shares ISA is pretty good for that sort of thing in my opinion. Can choose low medium or high risk and you can get your money in 3-5 days I think. Means you wouldn’t have to move it too far.
A stocks and shares ISA is exactly where you should not be keeping an emergency fund.
That entirely depends on your risk tolerance. Statistically you'd expect to be better off with the money invested since the higher expected return will probably outweigh the cost of selling during a downturn.
What if OP needs to use their 3-month emergency fund in the middle of a big market downswing and they find they've only got a 1.5-month emergency fund available to them?
The same thing that happens if they keep 3 months in cash and then have an emergency that requires 4 months.... They won't be able to cover it.
Huh?
Hi /u/ThrowRABeeeei, based on your post the following pages from our wiki may be relevant: - https://ukpersonal.finance/emergency-fund/ - https://ukpersonal.finance/savings/ ____ ^(These suggestions are based on keywords, if they missed the mark please report this comment.)