Hello all.
What do people think about how much fund should be reserved for raining days.
For example, consider a couple with joint annual income $85000 (ie. $5000 per month take home) with 2 young children. Assume that the couple has life insurenace and income protection plan insurance.
After having done the annual tax return , the figures would look like this.
Monthly Expense : $2000 per month
Investmnet Expense
(+ve geared & -ve geared IPs) : $1500 per monthSaving : $1500 per month
Total Loan Amount : $1.25 million
Total Asset Value (including PPOR) : $2 million
Fund Reserved for Raining Days : $200 KDo people think that the monthly saving $1500 per month and reserved fund $200 K is suitable for raining days.
Its all personal opinion, but most advisers recommend an emergency fund of 6-12 months expenses in a liquid form (cash or easily and quickly converted to cash).
So your provision appears adequate at the very least. Of course your personal circumstances, security of income, appetite for risk etc. all play a role.
Cheers[
]Yes, 6 months of cash reserves is generally sufficient. Brianhc has covered the provisos well.
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