Keeping Investment Cash Available

[Dtail]

I had a discussion with a couple of guys that strongly believed bitcoin, the stock market and the casino were all equally risky. They had all their ‘investible’ money in bitcoin

Bitcoin aside, equating casinos and the stock market is silly and mathematically not correct.

 

[kgtest]

Thanks for some of the suggestions and yes I knew that having that much cash would raise a few eyebrows. As you might have guessed I'm pretty financially conservative and I like the idea of always having that cash as a backup vs some of my other investments which can change quickly.

After retiring early I stopped investing new money into the market and simply built up my cash.

In your life, when have you ever needed $300,000 of liquidity for once single occasion?



Next question...
In your life what is the MOST cash you have ever needed on once single occasion? You should only need max 20% higher than that figure. That's how I finally convinced my super conservative construction foreman neighbor to move his 100k of cash.

 

[kgtest]

And to follow-up on the last two questions, my 92 year old grandfather, and my 88 year old grandmother certainly NEVER needed that much cash in a single instance of their lives.


One thing I could think of is possibly paying off a medical bill, or a lawyer or possible RANSOM lol. Too risky to have that much cash IMHO.

 

[pb4uski]

Hey there,
I know how to play with the Firecalc expenses and equity allocations, etc.
How does one play with a 50% equity loss?
I assume your reference is not going from 60% equity allocation to 10% equity allocation.

What I did is to on the Start Here page, reduce my portfolio by 30% (50% of 60% equities immediate and permanent loss).... then on the Portfolio page I changed my equities allocation from 60% to 40% (30% equities left/70% of total left, rounded down).

 

[Drake3287]

In your life, when have you ever needed $300,000 of liquidity for once single occasion?



Next question...
In your life what is the MOST cash you have ever needed on once single occasion? You should only need max 20% higher than that figure. That's how I finally convinced my super conservative construction foreman neighbor to move his 100k of cash.

I totally agree with you. For me it's just the security of knowing I have $300,000. in cash to fall back on if it was ever needed such as buying a vacation home or if the stock market totally collapsed.

I know this sounds strange and hard to believe for some, but I find that each month I have an excess of a couple thousand dollars from my pension that I have no real need for, thus much of it goes into my cash accounts. All my daily living expenses plus frequent travel costs come right out of my monthly pension.

Now that I've hit this $300,000. cash mark (1 million in total) I'll pretty much just be spending this extra monthly money on toys or what ever I come across. For me, saving any more then the 1 million I already have is almost a waste. I'm lucky enough to live in a highly sought after area so I have no reason to move or buy a nicer home.

I know this sounds just like another humble brag but it's not. Like many of us here, I've lived a financially (but comfortable) conservative life for so many years that I now find spending it somewhat difficult.

 

[Dtail]

What I did is to on the Start Here page, reduce my portfolio by 30% (50% of 60% equities immediate and permanent loss).... then on the Portfolio page I changed my equities allocation from 60% to 40% (30% equities left/70% of total left, rounded down).

Ah okay, interesting mix of math. Thanks.

 

[OldShooter]

... For me, saving any more then the 1 million I already have is almost a waste. ...

What happens when you die? Kids to inherit? Charities? We also have more money than we will need in any foreseeable circumstances, but our "excess" is invested in equities with the objective of increasing our estate for our sons' trusts and for our charitable donations. Certainly any increase, for us, is not a "waste."

Giving away money is kind of fun, actually, when we can identify specific opportunities to have impact. You might want to consider that for your monthly "excess." (We are not interested in adding our drops to a bucket that is mostly funded by large donors. No fun there.)

 

[corn18]

I have no beef with people that have won the game taking their money off the table.

 

[Drake3287]

I certainly use the word "waste" light heartily. Yes, we have 3 kids which someday will get everything but just our house alone which is paid off is worth around a million. That $325,000. alone is a pretty nice inheritance. $325,000. more then I ever received!

Realistically ours kids will be looking at $500,000.+ each when both my wife and I are gone. I guess having "to much" money is a nice problem to have. I think many of us here are lucky that we'll never have to worry about money again, something my parents, siblings and friends aren't lucky enough to say, and of course I never mention our finances to any of them.

 

[Fedup]

I have a lot of cash too. Technically I don’t rely on my portfolio at all. My income exceeds my expense by 30%. Leaving a lot of money to my kids is not my goal either, I worry it will take away their initiate to succeed in life. They will get some however. Just the real estate portfolio alone they will receive much bigger inheritance than most people have to retire on.
But I’m not one of those people who use liability matching or just strictly CDs.
My reason for investing is possible long term care cost. I don’t know how much and how long. I tend to plan for the worse and expect the best. It has worked out well so far.

 

[LOL!]

I don't keep any cash nor CDs in my portfolio, yet I have a 7-figure amount in liquid assets ready to buy equities any time the market is open.

 

[DrRoy]

I keep at least a year's spending in a MM. You could have 1/3 of your CD's roll over every 4 months, and have some balance in a MM.

 

[Badger]

... history has shown that long-term equity holdings are reliably far, far more profitable than fixed-income alternatives.

I don't think too many would disagree with that. However, not everyone has the time to wait long term. That's for young bucks. For others it's a question of "bird in the hand..." and what makes them comfortable.


Cheers!

 

[Monterey298sc]

I also have 120,000 in VGPMM. Yield little over 2%. Im happy with that .

 

[BeachOrCity]

In a rising interest rate environment like we are in using money market and shorter term cds is smart for the bond portion of your portfolio.

If you look at bond funds over the past year the intermediate and long term ones have all lost a bit of value due to the rise in rates.

When the fed seems done with raising rates you should slowly move the majority of your cd and mm money to individual bonds an a ladder of end dates. Avoid bond funds.

 

[RunningBum]

Why avoid bond funds?

 

[BeachOrCity]

Because bond funds will still be holding bonds purchased at higher prices before rates increased and the prices one pays for your slice of those bonds won’t be fully reflected in the price of the bond fund.

 

[pb4uski]

I also have 120,000 in VGPMM. Yield little over 2%. Im happy with that .

What is VGPMM?... no such ticker that I can find.

 

[OldShooter]

I don't think too many would disagree with that. However, not everyone has the time to wait long term. That's for young bucks. For others it's a question of "bird in the hand..." and what makes them comfortable. Cheers!

Agreed, to a point. I teach an adult ed class on long term investing and I say that "long term" possibly starts at five years, but thinking ten is better.

But ... a retiring 65YO has maybe a 20+ year life expectancy (too lazy to look it up) so is he a "young buck" per your argument? I think so. That is why most AAs of people that age should and do still have a significant tranche in equities.

90YO? No long term there, sadly. So I agree with you on that.

Comfort? Of course. We should be trying to maximize personal pleasure, not just personal wealth.

 

[neihn]

What is VGPMM?... no such ticker that I can find.

Vanguard Prime Money Market.

 

[pb4uski]

Vanguard Prime Money Market.

I own it.... ticker is VMMXX... APR of 2.1% last time I looked... a fine place to hide out for a while IMO.

 

[NW-Bound]

I hold a lot of cash now, because bonds don't look good now. My cash earns some interests too.

Inflation is rising, and so will interest rate. Yesterday, heard some argument that the Fed should not be afraid to invert the yield curve if necessary. Yikes!

 

[Fedup]

I own it.... ticker is VMMXX... APR of 2.1% last time I looked... a fine place to hide out for a while IMO.

I own this thanks to your comment but I only got 1.75% instead of 2.08% as stated in the fund. Can you explain to me why there is a difference? Is it the annualized thing?

 

[pb4uski]

Click on that "C" next to the 2.08%... it says average analized income dividend over the past 7 days. But the last dividend on 8/31/18 was $0.00175 and [(1+0.00175/31)^365]-1 = 2.08%.

Where are you getting the 1.75%?

 

[Fedup]

Click on that "C" next to the 2.08%... it says average analized income dividend over the past 7 days. But the last dividend on 8/31/18 was $0.00175 and [(1+0.00175/31)^365]-1 = 2.08%.

Where are you getting the 1.75%?

I got $175 per $100k, so I thought it’s roughly about 1.75%. Thanks for the explanation.