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Old 12-31-2011, 11:08 AM   #21
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+1 - I use this for saving for short term major purchases such as a replacement vehicle, vacations etc.

I have my annual living expenses, taken from my retirement investments (dividends and other withdrawals), paid into a bank savings account, currently only ~1%

I also have I-Bonds as an emergency account.
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Old 12-31-2011, 12:59 PM   #22
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We have our cash laddered in CD's (1-3 yrs) generating a little over 9% (in local currency) and a few % more in currency appreciation. As new cash arrives (dollars/Euro's) we keep it in the mattress (so to speak) and convert to local currency when seasonal variations are in our favor. One of the problems here is accounts are only insured up to a little over 30k per institution, so you need to maintain accounts in many banks if you have sizable holdings.
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Old 12-31-2011, 01:51 PM   #23
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I first read about this tactic years ago in the book "The Only Investment Guide You'll Ever Need" by Andrew Tobias. I think the author must have been a BogleHead even if they had not yet been invented. He noted that a famous multi-millionaire (back when a million dollars was worth something) got a better return on his mouthwash - which he bought by the case to get a big discount - than on his investment portfolio! As mentioned above, the discount return was also tax-free!!
I actually learned about this form of saving from my dad back in the late 60's/early '70s when inflation was "raging" at 3%! His other reason for "hoarding" was that he had survived (and I mean that in the literal sense) the depression. While saved money in the depression actually appreciated, no one he knew had any of it. So, anyone with food was a "king". He looked at his little "grocery store" cabinet as a savings account AND a life-line.

Later in the '70s, I heard this savings method codified by a guy named Howard Ruff. Sure didn't buy into everything he suggested, but I liked the idea of having at least one other "game" to play when it came to cash management.

I like the idea of buying the Forever Stamps as well. I've done that each time a price hike is announced.

Nords, I know that our inflation is nowhere near what it was back in 1982, but my personal inflation has been running pretty hot lately. Combine that with the lack of "inflation" of assets and it makes one think creatively about how to deal with these issues.

Also, I like to have a little more control over "things". I can't control when Discover or ING will (again) lower their interest rates, but I can control and manage what I purchase to a large extent. Items I know to be vulnerable to inflation, I tend to stock up on. YMMV.
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Old 12-31-2011, 03:13 PM   #24
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Originally Posted by Koolau View Post

Also, I like to have a little more control over "things". I can't control when Discover or ING will (again) lower their interest rates, but I can control and manage what I purchase to a large extent. Items I know to be vulnerable to inflation, I tend to stock up on. YMMV.
I rather like this idea. I wish there was a convenient way of stocking up on Gasoline, electricity (especially in the island) and most importantly medical care. Between Kaiser raising rates and expensive dental care it looks like this year once again I'll be itemizing medical deductions.
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Old 12-31-2011, 03:20 PM   #25
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Originally Posted by Koolau View Post
I actually learned about this form of saving from my dad back in the late 60's/early '70s when inflation was "raging" at 3%! His other reason for "hoarding" was that he had survived (and I mean that in the literal sense) the depression. While saved money in the depression actually appreciated, no one he knew had any of it. So, anyone with food was a "king". He looked at his little "grocery store" cabinet as a savings account AND a life-line.

Later in the '70s, I heard this savings method codified by a guy named Howard Ruff. Sure didn't buy into everything he suggested, but I liked the idea of having at least one other "game" to play when it came to cash management.

I like the idea of buying the Forever Stamps as well. I've done that each time a price hike is announced.

Nords, I know that our inflation is nowhere near what it was back in 1982, but my personal inflation has been running pretty hot lately. Combine that with the lack of "inflation" of assets and it makes one think creatively about how to deal with these issues.

Also, I like to have a little more control over "things". I can't control when Discover or ING will (again) lower their interest rates, but I can control and manage what I purchase to a large extent. Items I know to be vulnerable to inflation, I tend to stock up on. YMMV.
I've stocked up on Forever Stamps big time. Each time the post office announces another rate increase, I smile knowing I'm already covered. I keep the stamps in my safe and treat it like hard earned cash.
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Old 12-31-2011, 03:27 PM   #26
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This is my approach too. Lots of CDs and Munis. Will try to keep about 20k-50k on average also on my BoA current account until I reach 62.
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Aside from the floating balance I maintain in my payment account, I have my cash in three buckets:

- An online savings account paying something close to 1% (about a third of the balance)
- A loose ladder of CDs that started out with original terms of 5 to 10 years (about 50%)
- More recently, I put the remainder of what had been in the online savings account into I bonds as a way to generate slightly higher yields in what amounts to a 1 year CD
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