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Where do you keep your emergency fund?

rhadamantus · 61 · 16917

freefront

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Reply #45 on: Oct 09, 2012, 08:08 PM
 
I think SDA shouldn't be thought of as a parking spot for emergency funds at all.
Any specific reasons why I should not park my emergency funds at SDA,please? :help:

^The way i understood how SDA works: the money is usually in big tranches of 500K-1M per placement( varies in every bank), and 100K in subsequent additional placements. You can opt to do compounding interest or take out the interest at the end of the 30-day term (the shortest). All the interest earned from the prior placement will be plowed back up to the nearest hundreds. There is no pre-termination because the bank which made the placement for you "sent" and "lent" the money to the Central Bank, and not to their own borrowers. It is out of their hands, so to speak. They are no longer responsible for it, therefore, can no longer be talking to you until the CB returns it. So, if you are anticipating the use of your money in SDA, drop by the bank with the instruction that your money won't be placed in a new term after the current term matures. It will then stay in your savings account earning the prevailing annual rate on savings.

IMO, SDA can still be used as a parking investment vehicle for your savings, but, as a thirdliner. First would be your savings account, then your time deposits or maybe UITFs( if you want to chance the volatility and the bother of pre-terminating and re-investing the part of the funds you won't need). The bank people usually recommend that you use an SDA to sort of guarantee the one year contract when you rent a safety deposit box inside their premises or you already have a program to pay a purchase in, say, 6 months.


freelancer_babe

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Reply #46 on: Oct 10, 2012, 04:36 AM
I wonder where @jaolave23 and @darkknight got the idea of not parking money in SDA's.

SDA's are one of the excellent places to put in a portion of your emergency funds!!! (You may opt not to put all your emergency fund in SDA's for liquidity.)

@freefront is right about how SDAs work. These are very similar to time deposits except that pretermination is not allowed. Unlike time deposits though, these are not subject to PDIC's coverage - because the money goes straight to the BSP, so the bank is merely a placement channel. Pretty much stable than banks, I'd say, because it will take a war or a major economic downfall in our country not to be able to get the money invested in BSP. Do take note that BSP is MOAB - Mother Of All Banks!

Most banks require millions of pesos in placements, but I know of only two banks that offer "affordable" placements. BPI, which allows you to open an SDA at P50,000 and Security Bank, at P100,000. However, do take note that the other banks with millions of placements generally offer better interest rates (so you get more out from your millions of money) than BPI and Security Bank.

Quite off-topic, but mentioned anyway on @freefront's post. BPI does allows their clients to rent safety deposit boxes after maintaining only around a total of P100,000 in one or more BPI bank accounts (savings, checking, time) for six consecutive months. It is a good thing to know that this bank do not require SDA's to be opened just for a safety deposit box.
« Last Edit: Oct 10, 2012, 04:38 AM by freelancer_babe »


IGX

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Reply #47 on: Oct 10, 2012, 07:32 AM
Hi Freelance_Babe,

Maybe @Joalave23 and @Darknight suggested not to put money in SDA's because of its low rate?

I have money in SDA (BPI) and the rate is very low, it doesn't even come near to TD's of other banks.


freelancer_babe

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Reply #48 on: Oct 10, 2012, 07:56 AM
Maybe @Joalave23 and @Darknight suggested not to put money in SDA's because of its low rate?

Siguro nga. Emergency funds shouldn't be put in very risky investments. Tama ba naman na ilagay ang emergency funds sa stock market? Or sa business? Maling kutob lang lahat ng capital na nainvest pwedeng mawala. :-p

Well, the only loss that you get is that the purchasing power of money goes down when using savings, time deposit or SDAs, usually after only one year - but at least you're not losing the entire principal. It is advisable to save up another fund for investing, separate to that emergency fund, that you can use for higher yielding investments and businesses.

I have money in SDA (BPI) and the rate is very low, it doesn't even come near to TD's of other banks.

Bakit mababa ang SDA mo? it's usually lower than TD, unless you've invested on rural or even savings banks.

I consider putting money in rural banks as an investment. Hindi rin safe ang pera doon.


IGX

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Reply #49 on: Oct 10, 2012, 08:54 AM
Bakit mababa ang SDA mo? it's usually lower than TD, unless you've invested on rural or even savings banks.

Hi Freelance babe,

Medyo mababa nga, I get around 2.3% net with my SDA.  Any idea what is the current market rate?  Baka mababa bigay sa akin ng BPI.

With other banks (not rural, not savings), I am given a rate of 3.5 to 3.75% (gross), net is around 2.8% to 3% which is still higher than the SDA Net Rate.

This makes me want to decide taking out my SDA and moving it to other banks / investments.


freelancer_babe

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Reply #50 on: Oct 10, 2012, 09:11 AM
This makes me want to decide taking out my SDA and moving it to other banks / investments.

If this is true, then why not? I-punta mo muna sa time deposit. :-D

As far as I know the SDA are fixed for each bank and don't vary with every client. Do some window shopping on different banks and check their rates.

I haven't done much research lately so I am not updated. Maybe the others could help.


wiggy

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Reply #51 on: Oct 10, 2012, 10:23 AM
Thank you for the wonderful discussion above.

Anyway for me, just my opinion, go for an SDA (central bank's) if:

* You are after of the "safety" of your money and not the interest rate. It is logical to think that worst comes to worst, if all banks will eventually close, central banks will be the last one to go down (after all efforts were exhausted). Medyo pahirapan din kasi to reclaim your money from PDIC.

* If your cash is beyond what PDIC can cover. Yun ang problema mo, mashado ka maraming cash, hindi mo alam kung saan itatago! Though you can deposit in chunks (equal to PDIC coverage amount) to different banks. Like if you have 20M, you divide it in 500k chunks and deposit them to different 'steady and safe' banks. Or you can opt to put them all in SDA in one go.

But for an average worker's emergency fund, he should seek balance between the "safety" of his money and opportunity for growth (thru interest).
« Last Edit: Oct 10, 2012, 10:30 AM by wiggy »


darkknight

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Reply #52 on: Oct 10, 2012, 11:36 AM
I would like to make clarifications regarding...Any specific reasons why I should not park my emergency funds at SDA,please?
Some PMT members were misquoting me.I want to clarify that I am not against the idea of parking emergency funds at SDA.I am asking jaolabe23 any specific reasons why i should not.
Telling you the truth,I've just opened my first SDA at BPI with the rate of 2.63 % p.a.yesterday.The rate of TD was 1.83% p.a. lower than SDA. :hello:


freefront

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Reply #53 on: Oct 11, 2012, 01:48 PM
^Emergency- you need liquidity. There is no pre-termination in SDA.


GIG

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Reply #54 on: Oct 18, 2012, 09:33 AM
key word here is safety and ease of access. Its an emergency fund its not for investing etc. So best to keep it in a separate atm savings account on the big 3 banks ie. bpi,metro or bdo. If you cant keep your hands from it, better leave the atm at home though hahaha!


brians

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Reply #55 on: Oct 18, 2012, 09:56 AM
emergency fund? sa bahay sa safe


freefront

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Reply #56 on: Oct 18, 2012, 12:39 PM
^I have a cash box na pinalagyan ko ng combination padlock sa bahay. Minsan, kinailangan may itakbo sa emergency room and my niece called me for money. Ibinigay ko yung current na combination. Wala lang---trip lang nyang magpasaya, kinuha lahat yung 5 thousand na puro 100 crisp bills at yun ang inilatag sa cashier  :hihi:  I usually change the combination after I've replenished the box.


GIG

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Reply #57 on: Oct 18, 2012, 03:51 PM
@freefront

openly applying to be your nephew hahaha!


freefront

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Reply #58 on: Oct 18, 2012, 07:35 PM
@freefront

openly applying to be your nephew hahaha!

Application denied!  :D May pila pati hehehe...sa spaghetti sauce pa lang na hindi ko maulit-ulit ang timpla, hindi ko na sila maipag-hanapbuhay  :hihi:


GIG

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Reply #59 on: Oct 18, 2012, 07:45 PM
awww! spaghetti tester na langpwede? hahaha!


 


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