What’s one burning personal finance or investing question you’ve been afraid to ask!?
murph
6 replies
Stock Sunday! Totally biting Sarah Wright’s theme from the other day, but felt like the perfect tie-in to celebrate *today’s* launch of Macro Sherpa (cheap plug!).
Let’s hear it! What’s your number one money question?? 💸🔥
https://www.producthunt.com/post...
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Gong Zijian@zijian
Launching soon!
Absolutely, here's a concise response: "One question I've always hesitated to ask is how much emergency savings is truly enough without overcompensating and missing out on investment opportunities? It feels like a delicate balance between security and growth."
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@zijian such a good/important one! This one is not a perfect science, but you’ll most commonly see anywhere from 6-12 months of living expenses recommended in an emergency fund (cash/risk-free cash equivalents). You’re basically self-insuring.
I like thinking about it as a range in there based on what feels appropriate for your risk tolerance and lifestyle.
Anything beyond 12 months and the opportunity cost gets a little harder to justify. That said, if your costs are USD, rolling t-bills at 5% yield has made that wayyy more attractive over the last couple of years!
One question I've always hesitated to ask is how to effectively diversify my investment portfolio without spreading myself too thin across too many assets. It's about finding that sweet spot where risk is minimized while still capitalizing on growth opportunities.
@ryan_motiff yessss. Another banger of a question. As you allude to, if you take it to the extreme and perfectly hedge out every risk, you’ve effectively just recreated a complicated version of the risk-free rate!
One of the core principles is finding assets that are uncorrelated with each other. Obv correlations change and the future may not look like the past, but you can measure the correlation and estimate whether an asset you’re considering adding is likely to be accretive to the long term geometric return of your portfolio or not.
Deep rabbit hole, but this is a fun blog (not mine) that gets into the math behind correlation and portfolio return.
https://breakingthemarket.com/br...
Tangentially related, but I threw together this primer on investing and economic regimes:
https://macrosherpa.com/blog/mac...
Murph
