“To expect the unexpected shows a thoroughly modern intellect”
– Oscar Wilde
Passive or Index funds
Hedge Funds or Unit Trusts
Property or Shares
Direct or Indirect Investments
Bonds or Equities
The list of financial decisions to consider as an Aussie expat goes on, but the most important consideration and element of your financial plan is your Emergency Fund. Simply put, the Emergency Fund, or ‘Rainy Day’ Fund, is a cash buffer that you can use to continue to cover your living costs if the unexpected strikes.
Planning for your Emergency Fund is not a sexy topic, nor is it necessarily an exciting piece of your financial plan, but as Aussie expats, it’s incredibly important and we’ve highlighted a few simple strategies that you may wish to implement yourself for your ‘Rainy Day’ fund.
As a general rule of thumb, you should have 3 – 6 months’ worth of your household expenses in your Emergency Fund. Below we’ve listed 4 simple strategies that you can consider implementing.
- Cash in the Bank
The simplest place to keep your Emergency Fund is simply as cash in the bank. It is also generally sensible to keep it in the currency of the country that you’re currently residing to avoid playing the FX game that many expats get caught up in. Given the low interest rates paid in Singapore and abroad, you may want to consider some of the ‘higher’ interest accounts available, such as the DBS Multiplier account.
- Offset Account
If you have a home loan on an investment property, you may want to consider keeping your emergency fund in your offset account, as this will at least allow you to generate a return on the cash. For example, if the interest rate payable on your investment loan was 4.5%, then this may mean (depending on the loan structure and features) that for each dollar held in your offset account, you can generate a return of 4.5% in interest saved. It’s important that you also consider the tax implications here of any cash you hold in your offset account.
- Cash-Based ETFs
You may also want to consider holding your emergency fund in a cash-based Exchange Traded Fund (ETF). This may improve the overall returns on your cash held, but it’s important to do your research here and ensure that you’re not taking on unnecessary additional risk.
It’s important that you try to avoid market risk with your Emergency Fund, as it’s there to protect you and your family in the event of an unexpected occurrence, such as a job loss or health concern. Once you’ve built your emergency fund, then you can start investing elsewhere and growing your asset base with much greater peace of mind.
To your financial success!
Jarrad Brown is an Australian-trained and qualified Fee-Based Financial Planner with Australian Expatriate Group, division of Global Financial Consultants Pte Ltd providing specialist financial advice and portfolio management services to international and local professionals in Singapore. Jarrad Brown is an Authorised Representative of Global Financial Consultants Pte Ltd – No: 200305462G | MAS License No: FA100035-3
Australian Expatriate Group is licensed by Global Financial Consultants in Singapore, with a team of Australian-trained, experienced and qualified, allowing us to provide specialist advice to Australians living abroad.
To learn more about how we may be able to help you, please contact us:
✆ +65 8282 5702
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General Information Only: The information on this site is of a general nature only. It does not take into account your individual financial situation, objectives or needs. You should consider your own financial position and requirements before making a decision.
*Please note that Jarrad Brown is not a tax agent or accountant and none of the content outlined here should be taken as personal advice. You should consult your tax agent and financial adviser to review your current personal finances and financial goals to consider whether this strategy is appropriate for you.