Thursday, 2 April 2020

Preparatory Savings

So, with all of this uncertainty going on in the world and the markets, one wonders what do to with my current savings plan.

I have had some expenses and yes threw a bit extra into my TFSA in order to put it into the markets (stock market) when it dropped to 2016 levels.

This means that my Mid-Term Savings took a beating and needs to be topped back up. It is a bit of a scary time for me at this exact moment for I have limited cash in the bank.

For clarity and being honest, I am not a financial expert in anyway shape or form. This is just what I know and what makes sense to me.

You see, while stocks are an asset they are not liquid in the sense that I can go to the store and buy food with stocks.

Yet stocks go up and down in value and the company whose stock you hold will pay you money (dividends) just for owning that stock (usually once a quarter).

Not a whole lot but a bit, as that is what they do with a portion of the profits they make. As in: maximize returns for shareholders (aka: anyone who owns their stock).

So, sure I could sell some stocks in order to pay a bill or buy food, but since those stocks are a good portion of my long term savings plan, I want to leave them there and add to them regularly.

Which brings me to my current dilemma. My Mid-Term Savings will be back to being fully funded by May 7 (three paydays away, including Tuesday’s).

So, at that time I could resume buying stocks which would be smart to do during this time while the market is still in turmoil and relatively low.

Or I could overfund my Mid-Term Savings in anticipation of having to draw down on it in the near future. You know, keep extra cash on hand as it were. 

When this is all over and thing return to normal, then transfer that stored up cash into the Stock Market.

Again, this all seems like “rich guy problems,” but I only got this way (with a tiny fistful of cash in my hand) by freezing my ass off in my RV since July of 2014.

Don’t forget I am working to having that land and that house (homestead) all debt free.

I will overfund my Mid-Term Savings and see how things go, so as to at least not have to touch the stocks or other investments just yet.

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