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Author: TTRoberts Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76384  
Subject: Re: What comes first? Date: 2/16/2001 7:47 PM
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c130king, you asked:

<< What if you don't have enough to do all 5 of your steps? Is there such a thing as too much tax free/deferred investing? Are you ever concerned about having all of your funds tied up in somewhat untouchable investments? I would think some percentage of investments in taxable instruments so that you can get to it if necessary.

Any thoughts on this?
>>

That's a VERY, very, very good point and question. Too often in this forum the idea of an Emergency Fund goes without any consideration. I suppose that's because the thinking around here tends to be focused on maximum return without taking other things into consideration (e.g. risk tolerance).

An Emergency Fund is indeed part of one's total asset allocation and is indeed a place where you would look to so that "you can get to it if necessary". So, my thoughts as to "what comes first" are that one should put a high priority on establishing an Emergency Fund. Then if one has a company 401(k) with employer matching, that would be the next item on the list as the employer matching is thing to take advantage of. After that, it really DEPENDS on you and what YOUR situation is , your personal philosophies and what your specific short term and long term goals and objectives are. There's no cookie cutter way that's “right” for everyone. What's right for me may not be right for you - what feels comfortable for me may not feel comfortable for you. There are all kinds of way to succeed financially. A key thing I've found in really successful people is that they have a good idea where they want to go and how to get there . . .and STICK TO IT (they don't get sidetracked easily – especially by what they may want to buy for themselves . . . not using debt except to leverage earning power).

I hope these thoughts are helpful.
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