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|Subject: Is my analysis flawed?||Date: 9/25/2001 4:04 PM|
|Author: emayes||Number: 2105 of 35468|
After reading all the advice on TMF about putting emergency fund in Bank or Money Market, I made up my own mind and ignored the advice.
I've put $10k in VBMFX. My reasoning? :-
Although the NAV of the index fluctuates it only appears to do so within a few percent (I think the difference between the highest and lowest in 5 years is around 12% and over 10 years is <20%). Ignoring capital movement the yield seems to be 6%-7% which is 2%-4% better than I can get at the bank or money market. As I intend to leave the money as a permanent emergency fund (until I retire in 20 years) it would seem after 3 or 4 years the extra yield will have compensated for any future capital risk (and that includes me buying at the top of the market). I can get immediate access to short term use of part of the fund and replace it as needed.
But, it occurs to me that if it was that easy then why isn't it espoused by TMF. I have the uncomfortable feeling I have missed something glaringly obvious to the Foolish on this board?
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