My girlfriend is quite frugal and has successfully maintained an emergency fund of about $15,000 with an "incidentals" account that sits around $3,000.

She does not earn a lot of money, about $35,000 but has good has high income potential when she works contracts, she is 26 years old.

She has no debt, and really no outgoings except her rent and utilities. So all in all I would think a pretty solid position.

My question is:

Is her 15k in saving a waste earning less than 2% interest, should she be keeping 6 months EF as liquid and investing the rest? what sort of returns would she expect from low risk investment?

Now, she doesn't not know much about "adult" parts of life, only just rally taken control of her super and started looking at medical etc and insurances etc (not that we really need that stuff) I am historically bad with money, only just getting better the last couple of years, so my advice probably does not count for much. But i feel like she should do some research or speak to someone to get her money working for her. OR should she have more in the bank before she worries about that?

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    How can you have too much savings? It sounds like from your question she has a total saved of $15,000, which is 43% of her annual income.
    – DoubleVu
    Commented Dec 22, 2015 at 13:29
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    Fwiw, I didn't feel comfortable started to invest until my savings hit $50,000. Don't under-value comfort.
    – keshlam
    Commented Dec 22, 2015 at 14:12

3 Answers 3


Congrats to your GF!

"How much" depends a lot on how stable her income tends to be. If she has stable salary @ $20K plus $5K-$15K in contract work, then having a larger EF is important. If she has a consistent track record of pulling in $35K each year with contract work, then she may still need a somewhat higher emergency fund to tide her over between gigs.

The rule of thumb is at least 3 months' expenses before you start investing for better returns. If she is reliant on contract work, then holding up to 6 months' expenses could be wise just in case she hits a slow patch with work.

After that emergency fund is covered, she can look at investment opportunities with varying levels of risk & return:

  • Certificates of deposit will earn slightly better returns than just holding it in savings... but her money is only available at certain times without paying a penalty fee. There is almost no risk of her money declining in value.
  • ETFs would be the next place to look. She could open an Australian-based investment account and look at putting 50% into a Bond Index Fund & 50% into Stocks... maybe one that tracks the Australian Exchange.

I would also recommend putting it down in writing "why" she's investing/saving. Is she saving up for an awesome vacation? Maybe that's why she really is so far above a normal EF. Does she want a new car? Maybe there's not really so much to spare.

Bottom line: Assuming her monthly expenses are around $2K per month, she might have $4,000 to $5,000 that she could look to start investing "safely".

  • Most (not all, but most) of her EF should be in (short term, maybe 12 month) CDs. If she splits that $15K into 6x $2,500 CDs that are purchased every 2 months (for example: Jan, Mar, May, July, Sept, Nov) then her likelihood of needing to pay an early withdrawal penalty is greatly reduced, except in the unlikely scenario of instantly needing more than $2,500.
    – RonJohn
    Commented Dec 14, 2016 at 7:32

It's time she look into what employer provided retirement plan she can use. She's at the point where she should think about investing for the long term, with retirement in mind.


There are ETF funds that only purchase preferred stock from banks. I have one that pays a monthly dividend of a little under 6% per year. That means that it pays just under 0.5% every month. The purchase price of this stock just slowly goes up and up.

You can do a whole lot better than 2% per year.

The crux of the issue, as I understand it, is the lousy 2% interest she is getting. My point is that you can do a lot better than 2%.

An ETF is not a scam. The price has stability and slow growth because it buys preferred stock from banks.



Yes, she should invest. My answer is yes because 2% ROI is a lousy return and she can do better.

Looking at the 200 day moving average, the price goes from 15.25 in May of 2014 to 17.95 in Dec of 2015. That, in price appreciation alone, is a 17.7% increase. Add on top of that a 0.5% increase per month and you get a stellar 27.7% Total Return.

The increase in the Fed funds rate is a benefit to banks. PGF invests in Banks by buying their preferred stock. This means that the share price of PGF will continue to increase and its ability to pay the, nearly, 6% per year dividend will also improve.

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    Your answer isn't really very helpful on its own - it's rather strange to say "Reply and I will give you the ticker symbol". If you weren't an established user I would have assumed you were spamming in some way. Commented Dec 22, 2015 at 7:16
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    Is it an ETF or a stock, and if it just goes up and up all the time it sounds more like a scam than an ETF or a stock.
    – user9822
    Commented Dec 22, 2015 at 7:20
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    It is interesting how this ETF performed during the GFC where it fell from $13.88 in early 2008 to $3.20 in early 2009. That is a fall of 77% during a period when most stock markets around the world fell 40% to 50%. Doesn't sound like something very safe that keeps going up and up.
    – user9822
    Commented Dec 22, 2015 at 9:26
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    IIt also seems to go through periods of very sharp falls and recoveries, falling from $12.22 to $10.06 in mid 2010, falling from $13.79 to $11.13 in mid 2011, and from about $18 to $12 midway through this year. Seems like it goes through some very volatile periods, mainly to the downside. Not something I would consider very safe, nor something I would be recommending to others, especially when you have no financial qualifications. It would be handy if I could downvote twice, as this is a very bad answer.
    – user9822
    Commented Dec 22, 2015 at 9:33

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