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January 15, 2021

Take Stock!

I recommend that investors consider the Level3 Withdrawal Strategy, developed by the founder of American Association of Individual Investors. It divides a portfolio into two parts: equity and safe. The equity part is allocated to stocks. The safe part is allocated to cash and equivalents. Two to four years’ worth of planned withdrawals should be held in this second part. When stocks are within 5% of their highs, withdraw from the equity part. When stocks fall, withdraw from the safe part. Once the market rebounds, replenish the safe part from the equity side to ensure you have enough cash to protect to portfolio during the next downturn. -Charles Rotblut, a Vice President and AAII Journal editor at the American Association of Individual Investors in Chicago
January 7, 2021

HSA as FORCED SAVINGS

If you don’t have a Health Savings Account (HSA), build it up. And if you can pay for regular out-of-pocket medical expenses with other money, don’t take from the HSA. It acts like forced savings. Then in times of emergency, you can tap the HAS for reimbursement for those previous medical expenses-basically reimbursing yourself for medical costs you incurred in prior years. -Brendan McCarthy, director of wealth management at Three Bridges Planning, Melbourne, Fla.
January 3, 2021

Pay with Points!

Build up a stash of credit-card rewards points as part of an emergency fund. I always keep at least 25,000 points on my AmEx as a backup emergency fund. I can use my points to pay for groceries at Walmart or Amazon, or pay for things through PayPal. -Kimberly Foss, President and Founder of Empyrion Wealth Management, Roseville, Calif.
December 28, 2020

BORROW FROM THE FUTURE

Take the amount you’re investing into your retirement plan that is over and above the company match (if you have one) and split it between savings and retirement investing until you reach your emergency-fund goal. – Kyle Whipple, financial adviser and partner at Custom Wealth Solutions in Plymouth, Mich.
December 14, 2020

Limit Extra Debt Payments!

If you are paying down debt, don’t pay less than the minimum payment just to contribute to your emergency fund. But if you’re minimum payments are manageable, then build your emergency fund while you are paying down debt. Until you have at least three months of emergency savings, consider putting 50% of your available funds toward extra debt payments and 50% toward your emergency fund. -Shelly-Ann Eweka, a wealth management director at TIAA Charlotte, N.C.