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Disposable income vs long term savings
Old 12-02-2018, 07:20 AM   #1
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Disposable income vs long term savings

After securing the required long term savings for an ER (60 yrs old, Oct 18) we put aside several hundred thousand dollars to act somewhat as a discretionary fund for the years 60-70. I manage that money separately in investments that outpace inflation but also not locked down enough to prevent us from having “fun” should a chunk of cash be needed quickly. It’s both the quick availability of this money and the implication that it’s discretionary that makes me keep it separate; a pool of money that makes me smile and think of possibilities. Does anyone else use this same system or are all moneys always centrally invested and withdrawn in an orderly fashion.
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Old 12-02-2018, 07:33 AM   #2
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Money is fungible. But if your system works for you, then great.
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Old 12-02-2018, 08:05 AM   #3
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A lot of folks have various hybrids and buckets - we keep a few years of "cash" (same, liquid, minimally invested, CDs and the like) to cover expenses to avoid selling investments during any lows.

The topic of managing different "buckets" of money comes up here from time to time, it's really all just different ways to manage an asset allocation that helps you sleep well at night.
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Old 12-02-2018, 08:15 AM   #4
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I have what I call a "mad money" fund. It consists of excess left over from my planned SWR. I thought about putting it in a separate account but concluded that all funds are fungible so I just keep it as a pseudo-fund in my tracking spreadsheet. I don't count it in calculating my portfolio for SWR. I suspect it is a useless fiction. So far I have had no reason to tap it (even this year with DD's wedding expenses). If/when the s**t hits the fan and I need to drastically cut back I doubt I would feel confidant in tapping it. If all goes even marginally well, I will never need it.
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Old 12-02-2018, 08:16 AM   #5
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I guess I did the same thing. After filling my SEP, Roth's and non-qualified savings plans each year I put the rest in a Vanguard account and invested it in their Balanced Fund. I figured that would keep pace with inflation without much volatility. Its grown to mid 6 figures. It's done just what I wanted and now I have it as an extra parachute in ER. I don't co-mingle it with my retirement funds, its just there in case an unplanned opportunity or situation comes up. If not, its going to be our long term care plan.
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Old 12-02-2018, 08:58 AM   #6
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So you have found that the money so,ewhat gets integrated as a long term safety blanket rather than a buy a ______ or take a trip?
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Old 12-02-2018, 09:07 AM   #7
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I also have a mad money bucket. It’s just an entry on a spreadsheet, but I put credit card rewards, eBay sales, Ibotta rebates, any “found” money in it. I use it to buy things I want, without quilt. Presents to me, trips, good wine. It’s not a large sum, usually $3000-$6000 over a course of a year, but it’s money that requires little thought to spend.
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Old 12-02-2018, 09:33 AM   #8
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Does anyone else use this same system
Not me. We do keep some amount of cash but it's not a fun money bucket.
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Old 12-02-2018, 09:39 AM   #9
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We have and continue to build an emergency account outside our investment portfolio. The most likely usage will be for a vehicle in the future.
Yes we have been through the many discussions on whether to include or not in your AA.
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Old 12-02-2018, 09:53 AM   #10
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We have and continue to build an emergency account outside our investment portfolio. The most likely usage will be for a vehicle in the future.
Yes we have been through the many discussions on whether to include or not in your AA.

I have a similar approach and use Quicken’s “savings goal” feature to segregate the funds from other investment accounts. The goal is titled “EF/LTC” and is funded from three different sources: money market, stable value, and Treasuries.

I try to treat it as a real emergency fund, an example being some dental work (just last week) that was a large spend. I’ll replenish that money over a few months.
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