Cash Position

[Scarecrow]

3% cash, but DW and I are still working, so more cash arrives each day. We don't need a cash bucket for expenses.

I was surprised at some of the high cash positions mentioned here.

 

[phil1ben]

I am 56 still working in my own business but hoping to retire this year if I can accomplish a transition. Have been FI for 15 years. My focus now is more towards tax savings and security rather than appreciation but my current allocation is:

Cash (CDs and Money Markets paying between 1-1.5% with 1-2 year maturities) - 25%

Individual Municipal Bonds (diversified in maturity, credit rating, and issuer) - 25%

Real Estate - 35%

Individual Stocks - 15%

I do not buy funds or use an advisor.

 

[NYEXPAT]

100% Cash as of mid Jan 2016. Haven't been in this full cash position since just before the 2008 crash. I admit that I'm a market timer but only over very long time horizon (many years). I am expecting greater than 30%-50% correction in equities from the peak, then jump back in.

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I would be more than happy to see 1620-1650 on the S&P,but will ease in on any break below 1700.

 

[wmc1000]

14% cash here - to cover expenses so portfolio isn't touched until 2019 at the earliest.

 

[RenoJay]

Around 15% if you count CDs as cash. That's about 6 years living expenses.


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[hesperus]

Cash, (cash in a interest bearing savings account) is at 8% for us. Will eventually get it down to 5%.

But I'm liking cash as of late. It's been performing well

 

[rvbound]

30% cash, but will probably whittle that down to 5-10% over the next year.

 

[racy]

26%. I include my Short-term Investment Grade Bond fund in this number. I want my cash to keep up with inflation. No plan to change.

 

[columbus]

Would you guys pull $30k out of market for 90 days to earn $400 on new checking deal?

 

[REWahoo]

Would you guys pull $30k out of market for 90 days to earn $400 on new checking deal?

No.

 

[MichaelB]

Would you guys pull $30k out of market for 90 days to earn $400 on new checking deal?

Nyet

 

[Gumby]

<2% , but then we've still got paychecks coming in every two weeks.

 

[W2R]

Would you guys pull $30k out of market for 90 days to earn $400 on new checking deal?

No.

Nyet

Nope

 

[Al in Ohio]

You serious? No.


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[ESRwannabe]

I have less than 1% in cash.

I have my brokerage money (which started out 15 years ago as my emergency fund money) in several tax managed CEFs which throw off monthly income from qualified dividends, long term capital gains, and some return of capital (from the option income CEFs which use ROC by design). At some point I will add in interest income from municipal bond CEFs and more ROC from individual MLPs. Maybe add back in some individual stocks at some point and some non-tax advantaged assets as well (equity/mortgage REITs, BDCs, taxable debt, etc).

With equity CEFs I am basically targeting three categories: (1) your typical equity CEF that pays out every cent it can each year and uses leverage (2) equity CEFs that put a substantial percentage into qualified preferred as wells as common stock, use leverage and purposely hold back some UNII so that distributions grow each year and much less likely to decline in a down turn, and lastly (3) CEFs dedicated to option income strategies and use no leverage (call option percentages range from 45% to 95% among diff CEFs, one also uses a collar strategy to be even more cautious).

Yearly income from equity CEFs is currently around 89% of my living expenses and taxed at 15% or less.

 

[RobbieB]

Twelve percent.

 

[Another Reader]

Twelve percent.

Twelve percent?? More caviar!!!

Seriously, I keep a higher than average percentage of paper assets in cash because I keep a minimum of three years of planned withdrawals from the inherited IRA in cash plus reserves for the rentals and emergency/rainy day funds are in taxable cash accounts. I'm also having trouble committing cash in large amounts to the market right now. Things are just too expensive!

 

[COcheesehead]

I have very little in cash: 1.5%. One of the sins of investing is keeping too much cash. Every dollar needs to work, even a little bit.

 

[RobbieB]

Mine is working at 10 milli-percent.

 

[Hutch111]

15% & keep going up...

 

[audreyh1]

I have very little in cash: 1.5%. One of the sins of investing is keeping too much cash. Every dollar needs to work, even a little bit.

Nope.

Although at 1 to 1.3% interest even cash is still working for you.

 

[pb4uski]

Nope.

Although at 1 to 1.3% interest even cash is still working for you.

+1 The drag of some cash isn't all that significant. Let's say that in the long term that bonds earn 4.5% and cash earns 1%. My AA is 60/35/5, so 5% cash drags my overall return down by .175% (3.5% * 5%).. IMO a small price for peace of mind.

 

[audreyh1]

Cash is an extremely useful diversifier. There is also the psychological benefit of having short term expenses covered while you leave most of your invested funds exposed to market ups and downs, making it possible to stay invested in the face of events like 2008.

Investing is not necessarily about maximizing the long term gain. If it were, everybody would be 100% invested in small cap stocks or even emerging markets as they have the highest long term returns. But few older investors do that. Why? Because of volatility. Most retirees living off their investments deliberately select a trade off between short-term volatility and long-term gain by diversifying across multiple asset classes.

 

[RHONDAVE]

41.27% in cash right now. This is due to large real estate sale which will be taxed. Not sure what to buy.

 

[COcheesehead]

+1 The drag of some cash isn't all that significant. Let's say that in the long term that bonds earn 4.5% and cash earns 1%. My AA is 60/35/5, so 5% cash drags my overall return down by .175% (3.5% * 5%).. IMO a small price for peace of mind.

5% isn't bad, but I read on here where some folks have way beyond that amount. 15%+. That is just giving money away. Plenty of low volatility options that earn 2%+ tax free.