Cash Position

My cash position pays no interest rate. I don't want the hassle to deal with it yet. My bond is G fund. Never have bond mutual funds, unless I buy directly and hold on the the bond, wait for it to mature.


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Had about 15% cash until recently, cut it down to 7% by buying more VG funds on the recent dip. Not yet retired by will be in April 2017!
General plan after FIRE is to keep 2-4 years of planned expenses in cash (with emergency fund etc.), or cash equivalent (I include CD's in this so probably 1-2 in cash and another 1-2 in CD's). It is the amount that makes me comfortable, and the wife more so and she is the primary shareholder in this company! :)
 
DFW_M5 said:
I am actually higher than that at the moment, although it does leave me wanting to get back closer to my target allocation. I liquidated some holdings earlier this month that were using a sector rotation strategy that was underperforming and too costly expense wise, so will gradually redeploy the $s to some lower cost active and index funds as opportunities arise. I like to have a mix of both active and passive type investments. Anyone else holding much cash this year?
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Unless you can be right 200% of the time (getting out and back in), you should have re-invested right away.

For instance, if an investor stayed fully invested in the S&P 500 from 1995 through 2014, they would've had a 9.85% annualized return.

However, if trading resulted in them missing just the ten best days during that same period, then those annualized returns would collapse to 6.1%.
Cost Of Missing 10 Best Days In S&P 500 - Business Insider
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Forgot to add that I'm considering Life Insurance cash value to be "cash" also. Two old whole life policies on me and one on DW. Not particularly large death benefits on any of these, but more than enough to handle final expenses. Had planned to cash them in after a few years of ER, as I thought it best to hang on to them for a few years just in case one of keeled over early into ER but we're both still kickin'.
 
Senator said:
Unless you can be right 200% of the time (getting out and back in), you should have re-invested right away.
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Agree, but could not do it instantaneously since I was transferring these sector funds from Wells Fargo to Fidelity, so I cashed out vs transferring in kind.
 
Alan said:
I count I-Bonds as cash since the principal is guaranteed but not regular bonds or bond funds.
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Weil then I have more cash. But I can't just go out and spend these Ibonds. Takes some time to liquidate and I'm locked in by the high rates they pay (old Ibonds). So I'll have to disagree on assigning them to cash.

We have maybe 1% cash right now. Today the market was bad. Tomorrow who knows. Certainly not El-Erian as the OP mentioned. If there is one "guru" I think is full of bull, it is that guy. He was wrong about a lot of stuff in the past. Just read is book which is bunk. Now that I said that, he's going to be right this time. :facepalm:

P.S. There are only intelligent observations. There are no gurus.
 
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Quicken says 32.2% in cash now, and that includes I-bond.

However, Quicken does not know that all of my put options are now "in the money", and if the market does not come up soon they will get exercised. After I am forced to buy these stocks, I will be down to 27.5% cash in April.
 
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27%, but only because I moved a good bit of my bond allocation into the stable value fund. So maintaining the asset allocation now requires me to lump bonds and cash together.
 
Let's see, how much in checking and savings? Less than 1%. Fully invested in the brokerage accounts in non-cash investments.
 
This thread is interesting

Cash clearly is not interpreted/ defined uniformly.

Are bonds same as cash ?

Is cash just what's on hand now or what will be earned by way of future interest and dividend income ?

How much cash "on hand" is also entirely dependent on when the snapshot is taken. Some make withdraws annually. Others monthly. Some only await a dividend check. Others sell stocks. Others wait for bond coupons or a portion of their ladder to mature.

We have lots of answers to the question but zero consistency. Makes it a fairly useless comparison and discussion.

A better question: The simple "what is your AA" between equities-bond-cash is probably a more insightful comparison.

Or

Cash+bonds+projected interest+projected annual dividend income + projected pension income + SS income = how many years of living expenses.

Or the one I like best :

If you could not sell any equities or hard assets other than bonds for the next X years ( like a long bear market where u didn't want to sell). how long would all those sources of funds and income on those funds last you in current or moderately belt-tightened lifestyle ( in terms of X years)

That last one assumes some money flows in from sources as well as flows out for expenses. This scenario is most realistic I think.
 
papadad111 said:
....
Or the one I like best :

If you could not sell any equities or hard assets other than bonds for the next X years ( like a long bear market where u didn't want to sell). how long would all those sources of funds and income on those funds last you in current or moderately belt-tightened lifestyle ( in terms of X years)

That last one assumes some money flows in from sources as well as flows out for expenses. This scenario is most realistic I think.
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First for us there is SS cash flow. Then since the AA is 55/45, we could dip into that 45%. Since about 7% is high rate ibonds, that means dipping into 38% fixed income. Of that 38%:

1% in true cash
4% in short term bonds (refreshed yearly from intermediate bonds, note **)
33% in intermediate bond funds (like VFIDX and BND)


** This is something I'm just setting up after seeing how some posters on the forum build a yearly "cash" reserve. It could be short term bonds, CD's, or money market. Depends on the rate structure. I'm willing to take a small risk here as some year's this will take a small hit but overall should give out a little more "cash". If we don't spend this in the year, it will roll over and accumulate per the VPW tool method. This is also consistent with my rebalance method which is to not buy stocks in a severe downturn and spend from FI.
 
Lsbcal said:
Weil then I have more cash. But I can't just go out and spend these Ibonds. Takes some time to liquidate and I'm locked in by the high rates they pay (old Ibonds). So I'll have to disagree on assigning them to cash.
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It only takes 1 or 2 business days to cash in a bond or part of a bond, if I put in the request in the morning it is usually in my bank by the end of the following day. Unless of course you mean that you have to hold an I-Bond for 12 months before you can cash it in.

I agree that the older bonds have higher rates but they can still be cashed in immediately if needed in an emergency.
 
50% true cash in TIRA.
I do not trust the boys.

Old Mike
 
I have about 51% bonds at the moment. This does not count as cash. The 3% cash I referred to earlier was in Fidelity's cash money market like things. I would much prefer to earn at least a nominal 2-3% instead of nothing, so have as little "cash" as possible.

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10% cash, 3 yrs expenses. This is my first year, second month in retirement. Being cautious about expenses. So cash could last longer.
 
About 1% in cash here. Plus about 4% in short term muni MF's which have been very stable the past couple of years.

Like some of the other posters, I don't believe in keeping much cash on hand unless it's part of a investment strategy at the time. If/when it becomes time to increase my allocation in equities, I'll do that by selling bond MF's.
 
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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