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Cash stash
Old 05-29-2019, 07:44 AM   #1
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Cash stash

I've read in several posts that some folks keep 3-5 years worth of budget in laddered CD's or money markets and replenish when the market is good.

1. Do you count that money in your overall portfolio balance?
2. Would a post tax bond fund serve the same purpose (like Fidelity's FTBFX total bond fund) realizing it would have a little more volatility?
3. What are other methods for having money in place for budget?

Thanks,
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Old 05-29-2019, 08:50 AM   #2
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Good question and everyone likely has their own personal choice.

1. I do count my 3 years of portfolio withdrawals in my allocation

2. I prefer a short term bond fund for less volatility. VSCSX for mine.

3. I usually spread mine over 3 accounts: Money market, rewards checking,
and the above mentioned bond fund. 3 years draw is 108K and is
part of my fixed income.

VW
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Old 05-29-2019, 09:10 AM   #3
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We keep 8 - 10 years in safe in investments (3.8% CDS)
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Old 05-29-2019, 09:29 AM   #4
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We have a very small cash stash, currently less than 2% of the portfolio. Most of our spending is covered by 2 pensions, dividends, and some rental income. The cash covers about one year of other spending. It's split between a MMF and online savings, both earning around 2.2%. I typically replenish once or twice per year, usually in conjunction with some large discretionary expenditure, like travel or home improvements.

I prefer to keep most of our money invested until actually needed. Over the 6 years we've been retired, I've steadily reduced the amount of cash in the portfolio. The only reason we still carry one year's worth is because it provides some timing flexibility that allows me to be somewhat opportunistic when selling (often more related to taxes than market timing).
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Old 05-29-2019, 09:35 AM   #5
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I keep my cash stash in money market funds and do count in my overall portfolio balance. I had tried keeping my emergency stash outside, but was easier on my spreadsheet to count together so just go with that. I have 3 money market accounts, all in Vanguard prime. One for my emergency stash. Another for my regular cash allocation and then my IRA cash allocation for rebalancing.

May not be the best setup on how to handle stashed cash, but works for me.
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Old 05-29-2019, 10:26 AM   #6
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The cash bucket here ebbs and flows. It gets padded to 5 years of expenses when stocks are up (sell high). For me a bond fund is not part of a cash bucket.
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Old 05-29-2019, 10:38 AM   #7
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I have one year worth of expenses in MM at Fidelity. Then have a S/T laddered CD's all <1 year that equals about 15% of my portfolio. Have S/T Bond funds as part of my general portfolio
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Old 05-29-2019, 10:39 AM   #8
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1. Yes
2. I use PMMF, as well as ST Bond fund, in my taxable accounts.
3. In addition to the above, I have Intermediate Bond Index fund in my IRA/Roth.


I use PMMF for paying large bills (new car, CCRC entrance fee, etc.) with check writing feature as well as cash-stash location.
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Old 05-29-2019, 10:43 AM   #9
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I keep only about 2 months expenses in cash (earns minimal interest in brokerage/checking account), with the idea that I want my money in the market as much as possible.

About 35 % of my portfolio is in fixed income (BND or equivalent), which I plan to use if my income stopped or some emergency came up. I think many would say this is a bit risky, but it seems like good enough access to funds for me.
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Old 05-29-2019, 11:24 AM   #10
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Quote:
Originally Posted by Cotton1929 View Post
I've read in several posts that some folks keep 3-5 years worth of budget in laddered CD's or money markets and replenish when the market is good.

1. Do you count that money in your overall portfolio balance?
2. Would a post tax bond fund serve the same purpose (like Fidelity's FTBFX total bond fund) realizing it would have a little more volatility?
3. What are other methods for having money in place for budget?

Thanks,
1. No

2. I don't know the answer to that. But folks will soon be along to advise us.

3. For cash - we keep less than $100K in the coffee can in the gun safe with a hot G-26 right beside it. Over the last 40+ year, we have been thru many hurricanes, tornadoes, frozen ice storms and being over in Africa the last ~20 year - Cash is King. Especially when things go apocalyptic....kidnapping is rampant here, death is everyday, want to get thru customs down in the Delta of Rivers State Nigeria.... get to the compound in Port Harcourt....Cash is King.... So to all those that think keeping "large" sums of cash on hand is foolish.... to each is own hombre. Life has some hard lessons in certain conditions.
I remember my grand parents on the farm in Elkhart, Texas, plowing the fields with mules, straightening bent nails to reuse, no Air Conditioning, drinking well water and out of the creek...
They were farmers both born in the late 1800's....lived off the land and what they grew and raised.

Poor man has poor ways....
My grandfather would keep money in a old Prince Albert tobacco tin. He could roll his own as good as store bought.... seems just a blink of the eye ago...
YMMV
Life's A Dance And You Learn As You Go...

PS - God Willing come New Years - ms gamboolgal I will be retired to Texas.
And I hope to never get another GD stamp in our passports ever again.
And yes, the cash will still be in the cigar box in the Gun Safe....
And I hope to be chasing ms gamboolgal around the old 4 poster buck neckid fulltime....
gamboolman....
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Old 05-29-2019, 11:34 AM   #11
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We have 9% in MM and short term CD's to manage our taxable income for ACA purposes. We include these amounts in our investment portfolio.
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Old 05-29-2019, 11:43 AM   #12
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Quote:
Originally Posted by Cotton1929 View Post
1. Do you count that money in your overall portfolio balance?
2. Would a post tax bond fund serve the same purpose (like Fidelity's FTBFX total bond fund) realizing it would have a little more volatility?
3. What are other methods for having money in place for budget?
Our choices (which are not necessrily the best choice for others):

1. Yes. We look at our portfolio in three simple categories - stocks, bonds, and cash. We are more conservative than most and went into retirement with closer to 7 years of cash requirements, as we have not yet decided when to take SS. It currently represents about 23% of our portfolio. If we overestimated we will consider reducing this percentage.

2. Some probably think so. We choose to define cash as never having to worry about principal fluctuations, period. So MMs, high yield savings accounts, and CDs for us, with a little (maybe 3%) in local checking/savings account for when immediate access is needed.

3. We also have cash on hand, but in truth we have been so used to having little cash in the house that it is a mindset change for us to do so. I think the most we have ever had in recent years at one time is about $500.
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Old 05-29-2019, 11:44 AM   #13
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Because I have a steady inflow of cash from 12 large monthly bond fund dividend payments and 4 large quarterly stock fund payments, I keep very little actual cash in my local bank's checking account. I hate the idea of having any significant amount of money earning zilch.


What I keep in the local bank is enough to avoid monthly fees plus a little more (~$700) to cover me for small, unforeseen expenses which can arise in a given month. It is pretty often I will use this cushion, or surplus, before replenishing it with a future surplus.


Sometimes, I have to keep a little more in the local bank in one month to pay for larger, lumpier expenses a month or two later. That's what planning is for. Most of the time, however, the 4 quarterly stock fund dividend payments coincide with the lumpier expenses.
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Old 05-29-2019, 12:23 PM   #14
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Not sure why you wouldn't count CD's or cash in a tin can buried in the high country. It is part of your portfolio and worth. Cash might go up or down at any given time so at that time of checking your worth, it is worth what is there, Right?

Yes, unless someone can tell why it shouldn't be?
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Old 05-29-2019, 01:08 PM   #15
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If you need electricity or technology to access your cash, I wouldn't call it a "stash". If you can reach out and grab your cash when the winds blow, storm howls, snow falls, ice grows, lightning flashes, waters rise, lights go out, and it's time to get out of dodge, then you genuinely have a cash stash. Also, don't forget about after the storm when a helpful guy shows up with a chain saw to cut up all the fallen trees burying your car and property - cash up front - you might want a real "stash". There's nothing wrong with cash-like investments like CDs, MM accounts, etc., I just happen to believe a true cash stash is physically on hand in case of life’s little emergencies.
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Old 05-29-2019, 01:32 PM   #16
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Quote:
Originally Posted by Cotton1929 View Post
I've read in several posts that some folks keep 3-5 years worth of budget in laddered CD's or money markets and replenish when the market is good.

1. Do you count that money in your overall portfolio balance?
2. Would a post tax bond fund serve the same purpose (like Fidelity's FTBFX total bond fund) realizing it would have a little more volatility?
3. What are other methods for having money in place for budget?

Thanks,
1. Yes... I target 5% of my portfolio. 2. Perhaps if low duration. 3. I use an online savings account that pays 2% but VMMXX would do as well and it yields over 2.4%.
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Old 05-29-2019, 01:34 PM   #17
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Quicken says I have 26.64% cash in my AA, which encompasses all investable accounts, including I-bond accounts at Treasury Direct.

Obviously, Quicken does not know about the $14 cash I have in my wallet, nor the cash my wife has (perhaps $300), so those are excluded.

Dividing the cash reported by Quicken into what we spent in the last 12 months, I get more than 10X.

Considering the stock dividends and SS benefits (mine has not been claimed), we can last a while without having to sell any stock for food.
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Old 05-29-2019, 01:45 PM   #18
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We have 6 years of living expense withdrawals in short term bonds.
And, 1 year in "cash".
The rest is index stock funds.
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Old 05-30-2019, 08:09 AM   #19
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thanks for all of the feedback guys. as usual, you gave me something to think about beyond what I had been considering.
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Old 05-30-2019, 11:00 AM   #20
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Quote:
Originally Posted by Cotton1929 View Post
I've read in several posts that some folks keep 3-5 years worth of budget in laddered CD's or money markets and replenish when the market is good.

1. Do you count that money in your overall portfolio balance?
Yes.


Quote:
... 2. Would a post tax bond fund serve the same purpose (like Fidelity's FTBFX total bond fund) realizing it would have a little more volatility?
Not sure.



Quote:
... 3. What are other methods for having money in place for budget?

Thanks,
My pension is more than what we spend on our lifestyle.

I keep a roll of bills in my desk, an assortment of denominations. So when any neighboring farmer wants to stop by to barter livestock, veggies or farm implements I can make change.

We are also vendors in roadside farmer's markets, so we always need to be ready to make change for city folk wanting to buy veggies or pork.

I keep a loaded Ruger Blackhawk sitting on top of a box of silver coins and a stash of $100 bills.

Rent checks coming in from our tenants go straight to the bank, we do not touch any of that money for ourselves. It is just used on the upkeep expenses of our rental real estate, and for charity.
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