Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 05-12-2016, 12:04 AM   #21
Thinks s/he gets paid by the post
Sunset's Avatar
 
Join Date: Jul 2014
Location: Chicago
Posts: 4,712
Heck, just have a credit card with a 20K limit for emergency usage, or a few of them. Then you can put the money into CD's and earn interest and still be able to cash them when you need to pay off the credit cards.
__________________

__________________
Sunset is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 05-12-2016, 12:07 AM   #22
Thinks s/he gets paid by the post
Sunset's Avatar
 
Join Date: Jul 2014
Location: Chicago
Posts: 4,712
Quote:
Originally Posted by COHgirl View Post
I would love to see it earn more but he is a bit stubborn and set in his ways. I suggested moving a small lump sum into a local savings account but he hates change and wasn't interested.

I do appreciate your suggestions though! I still bring up new ideas occasionally to see if he might think about moving the cash to a better rate. At least when the account was over $600,000 I convinced him to get it down to the FDIC level...
  • Show him this forum.
  • Open an Ally account for yourself so he can see it works.
  • I mean in 20 years he will have missed out on $200,000 of income or even more as interest rates rise in a few years.
__________________

__________________
Sunset is offline   Reply With Quote
Old 05-12-2016, 04:11 AM   #23
Thinks s/he gets paid by the post
 
Join Date: May 2014
Location: Utrecht
Posts: 2,206
I like to keep about 50k in a place where I can get to it within a few days with minimal cost penalties.

In practice it's much higher right now for lack of decent investment alternatives.
__________________
Totoro is offline   Reply With Quote
Old 05-12-2016, 05:33 AM   #24
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,407
Quote:
Originally Posted by COHgirl View Post
It earns .001% in the cash account. He feels better having cash because he will never trust the market. I know it could be working for us but he sleeps better with things the way they are. All our expenses are covered and we have fun money so I guess we are good.
I dunno if you can trust the banks either. They are scoundrels... [mod edit] Cash under your mattress is best, he'll sleep better if he sleeps on his money.

After you put it under the mattress, text me your address and when you'll be away from home.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
pb4uski is offline   Reply With Quote
Old 05-12-2016, 06:28 AM   #25
Full time employment: Posting here.
Golden sunsets's Avatar
 
Join Date: Jun 2013
Posts: 734
If I'm not mistaken the OP has not responded yet. One thing not addressed here is asset allocation. Most models suggest 5 or perhaps 10% allocated to cash. We personally don't consider CD's to be cash. I include them in our FI allocation. So depending on one's total portfolio a 10% allocation to cash could approach the OP's stash or some of the rest of those on this board could have half that amount easily. We have a sizeable amount in FDIC insured MM accounts earning 1.05%. I'm constantly on the lookout for higher rates but not seeing any. Ultra short term bond funds are one possible alternative but I still dislike the idea of NAV dropping below cost in a rising rate environment, especially seeing that their yield isn't that much greater than MM accounts. One possibility that I see is buying I bonds regularly, which for the first five years would occupy a portion of the FI portion of our portfolio and then could be considered part of our cash position, as the 90 day EWP goes away. We have a chunk of I bonds purchased more than 6 years ago that we continue to slot as FI, that could be moved to cash, freeing up some cash to move into FI, perhaps new I bonds. But we would have to pay federal income taxes if we redeemed them, creating a tax problem. And then again the current fixed rate component of I bonds is abysmal and we'd be stuck with that rate as long as we owned them. No easy answers.
__________________
"Luck favors the prepared mind"
Pasteur
Golden sunsets is online now   Reply With Quote
Old 05-12-2016, 06:52 AM   #26
Recycles dryer sheets
 
Join Date: Jul 2012
Posts: 229
Quote:
Originally Posted by cyber888 View Post
I never remembered having an emergency needing $500,000 or even $5,000. As far as I can remember recently, my biggest emergency spending is around $1,500 and that's when my 13-year old water heater leaked and needed replacement. DW Dad passed away - plane ticket & expenses was $1,200. Getting sick suddenly - medical insurance took care of most. Copay for emergency room was $100 and after diagnosis walked out the same day. Blew a tire - $200. I pray I don't need a big emergency, but there's the entire nest egg if needed. Can always sell stocks, bonds, etc ... in a few seconds.

You can have a $1 million or $10 million in reserve, a reserve Jet if you need to fly to get away from catastrophe, a reserve house if your house got hit by a meteor and still not feel safe. Feeling safe is all in the mind. You could croak tomorrow in your sleep and that's the end of it. Just go thru life without so much fear and I think you'll be ok.
This.
__________________
Shanky is offline   Reply With Quote
Old 05-12-2016, 07:20 AM   #27
Recycles dryer sheets
 
Join Date: Feb 2006
Posts: 223
Sorry for not responding earlier. 1st reserve is in cd's and bonds, earning average of 2%, but that will fluctuate based on cd maturing and reinvestment interest rates.

The reserve is money I don't count on when running FireCalc, i-orp, retirement calculations. I should have worded it and question better.

The question might be better asked, when you run retirement calculations do you add all your resources into retirement calculations or keep some reserve and if you keep some reserve, how much?

I know I am crazy, just ask DW, Just wondering how crazy.
__________________
I don't mind coming to w**k,
but that eight hour wait to go home is just bulls**t!
F-One is offline   Reply With Quote
Old 05-12-2016, 07:27 AM   #28
Thinks s/he gets paid by the post
 
Join Date: Nov 2009
Posts: 3,856
Many people who have posted here have layers, or tiers of money whose availability, preservation of principal, and rates of return vary.


I keep about $750 above the minimum balance requirements in my local bank's interest-free checking account as a cushion, or surplus, available to cover immediate, unforeseen expenses. This money is easily accessible via personal check, debit card, and cash from ATM. I tap into this cushion fairly often. This doesn't count using my credit cards to hold me over for a few weeks until the bill arrives (and gets paid in full, of course).


My next tier is about $40k I keep in an intermediate-term muni bond fund. It is not quite as liquid but I do have checkwriting privileges so it is pretty available in that regard. I would need 2 days to get money from there transferred to my local bank's checking account. This account is earning tax-free (mostly) interest every month. I rarely need to tap into this account, maybe once a year tops.


After that, I have other mutual funds which lack checkwriting and/or have higher rates of return and/or have somewhat larger variation in principal. I used one of those when I bought my last car 9 years ago.
__________________
Retired in late 2008 at age 45. Cashed in company stock, bought a lot of shares in a big bond fund and am living nicely off its dividends. IRA, SS, and a pension await me at age 60 and later. No kids, no debts.

"I want my money working for me instead of me working for my money!"
scrabbler1 is online now   Reply With Quote
Old 05-12-2016, 07:28 AM   #29
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,074
Quote:
Originally Posted by F-One View Post
The question might be better asked, when you run retirement calculations do you add all your resources into retirement calculations or keep some reserve and if you keep some reserve, how much?
IMO, not including all your investable financial assets in your calculations is just playing mind games with yourself. But since we all know playing with yourself is completely normal, don't worry about it - you won't go blind.
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 05-12-2016, 08:04 AM   #30
Thinks s/he gets paid by the post
 
Join Date: Dec 2009
Location: Alberta/Ontario/ Arizona
Posts: 3,126
We keep a fair amount in cash earning very little but it represents a very small percentage of our invested assets, maybe 2-3%. Not really to cover emergencies, but rather the usual cash flow lumpiness associated with big expenditures or dividend receipts. Our portfolios are in margin accounts and would support very high margin loans if a very big emergency were to arise. Really can't think of an emergency bigger than say $500,000 though? Being Canadian it wouldn't likely be health related. Maybe a ransom demand? But don't travel to risky places.
__________________
Danmar is offline   Reply With Quote
Old 05-12-2016, 08:24 AM   #31
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Mulligan's Avatar
 
Join Date: May 2009
Posts: 7,369
Quote:
Originally Posted by Sunset View Post
Heck, just have a credit card with a 20K limit for emergency usage, or a few of them. Then you can put the money into CD's and earn interest and still be able to cash them when you need to pay off the credit cards.


No CDs anymore, but I do have $3k sitting in a savings account in reserve untouched for many moons. Like you said above, I just use CC access checks for any purchases and pay off through my monthly pension check. 2% charge, 0% for 15 months is the one I use. In fact I have financed my last few car purchases just with access checks. Cheaper and no paper work.
__________________
Mulligan is offline   Reply With Quote
Old 05-12-2016, 09:58 AM   #32
Moderator
rodi's Avatar
 
Join Date: Apr 2012
Location: San Diego
Posts: 8,802
Quote:
Originally Posted by F-One View Post
The reserve is money I don't count on when running FireCalc, i-orp, retirement calculations. I should have worded it and question better.

The question might be better asked, when you run retirement calculations do you add all your resources into retirement calculations or keep some reserve and if you keep some reserve, how much?
Pre retirement I took $100k off my firecalc runs just to be cautious... but in reality - I know it's there... it was just a fudge factor.


Quote:
Originally Posted by REWahoo View Post
IMO, not including all your investable financial assets in your calculations is just playing mind games with yourself. But since we all know playing with yourself is completely normal, don't worry about it - you won't go blind.
OK REWahoo - you really need to issue a warning to put the coffee cup down, and swallow your sip of coffee prior to reading..... I have just cleaned coffee off my screen from laughing uncontrollably.
__________________
Retired June 2014. No longer an enginerd - now I'm just a nerd.
micro pensions 7%, rental income 18%
rodi is offline   Reply With Quote
Old 05-12-2016, 09:59 AM   #33
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 13,256
Quote:
Originally Posted by COHgirl View Post
"The standard insurance amount is $250,000 per depositor, per insured bank, for each account ownership category." --- From FDIC website

I was told that this meant with 2 names on the account, we are covered to $500,000 so it should be ok.

Not really.... if you have two names on one account it is only covered to the $250,000... adding names does not change the amount covered...


Now, you can structure different accounts with different names to have greater coverage.... like 2 accounts under a single different name for both....


To be sure, you can put in info here and they will tell you if it is covered....


https://www.fdic.gov/edie/calculator.html
__________________
Texas Proud is offline   Reply With Quote
Old 05-12-2016, 10:09 AM   #34
Thinks s/he gets paid by the post
ExFlyBoy5's Avatar
 
Join Date: May 2013
Posts: 1,977
Quote:
Originally Posted by Totoro View Post
I like to keep about 50k in a place where I can get to it within a few days with minimal cost penalties.

In practice it's much higher right now for lack of decent investment alternatives.
This is why I have a 60K HELOC. I can take an advance on it electronically immediately and can withdrawl up to 10K in cash the same day (the other 50K would take a few days to made available as cash, but I can't think of ANY reason I would need 50K in CASH).

As for totally liquid (go to the bank and get cash NOW), I keep that number around 7-10K. I have plenty of CC with large available balances, so getting things done quickly (new roof or now a big tree that is dead and has to be removed) is really never an issue.

Now...if some crazy thing happens like you see in the movies (the government thinks I am a spy and puts a lock down on ALL my accounts), then I might be in trouble. But...hopefully that doesn't happen!
__________________
Founder and Head Lounger @ The Life of Leisure Institute
Retired in 2014 at the Ripe Age of 40.
ExFlyBoy5 is offline   Reply With Quote
Old 05-12-2016, 10:29 AM   #35
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,074
Quote:
Originally Posted by FlyBoy5 View Post
This is why I have a 60K HELOC. I can take an advance on it electronically immediately and can withdrawl up to 10K in cash the same day (the other 50K would take a few days to made available as cash, but I can't think of ANY reason I would need 50K in CASH).
....
Now...if some crazy thing happens like you see in the movies (the government thinks I am a spy and puts a lock down on ALL my accounts), then I might be in trouble. But...hopefully that doesn't happen!
In 2008 thousands of people didn't have to go to the movies to see it:

When the Bank Freezes Your Line of Credit

Quote:
Across the U.S., sellers with good credit who have never been late on a mortgage payment are getting their home equity lines of credit (HELOCs) frozen or downgraded. Major lenders like Bank of America, Citibank, Countrywide Financial Corp., Washington Mutual Bank and USAA have announced that they're cutting back HELOCs ...
Bottom line, a HELOC isn't always a reliable source of 'reserve money.'
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 05-12-2016, 10:30 AM   #36
Thinks s/he gets paid by the post
Major Tom's Avatar
 
Join Date: Nov 2009
Location: SF East Bay
Posts: 3,128
I'm a little surprised that no-one (unless I'm missing something) has asked F-One any questions about the level of his income, either in actual dollar terms, or as a percentage of his reserve. For the average retiree in this forum, with a stash of maybe a couple of million, 700K would be considered far too high. For me, it's pretty dang close to my entire stash (though I am a bit of a pauper, in average ER terms).

Perhaps the reason no-one has asked about his annual living expenses is because unless they are over somewhere in the region of a million a year or more, almost everyone would consider a 700K reserve to be too much. I mean, even a gentleman who is at the higher end of the income ranges in this forum can't imagine what he'd need 500K for in a hurry.

So we're either speaking with Mr Trump, Mr Gates, or Mr Branson, or F-One is just incredibly (and I mean incredibly) cautious with his money. Just in case no-one else has asked you, F-One, I'd like to pose the question - what sort of expenses do you have in your life that you'd need to get your hands on half a million or more in a hurry? You can consider this a rhetorical question if you like!

EDIT - in retrospect, I was exaggerating a little for the purposes of effect. If OP has total assets of, say, $10 million, then keeping 700K in reserve might not be considered excessive.
__________________
ER, for all intents and purposes. Part-time income <5% of annual expenditure.
Major Tom is offline   Reply With Quote
Old 05-12-2016, 10:48 AM   #37
Recycles dryer sheets
 
Join Date: Apr 2011
Location: Castro Valley
Posts: 400
Quote:
Originally Posted by Danmar View Post
We keep a fair amount in cash earning very little but it represents a very small percentage of our invested assets, maybe 2-3%. Not really to cover emergencies, but rather the usual cash flow lumpiness associated with big expenditures or dividend receipts. Our portfolios are in margin accounts and would support very high margin loans if a very big emergency were to arise. Really can't think of an emergency bigger than say $500,000 though? Being Canadian it wouldn't likely be health related. Maybe a ransom demand? But don't travel to risky places.
I live in earthquake country and earthquake insurance is far too expensive. I can see needing to rebuild (about $600k) after a major quake if you are self insured.
__________________
jkern is offline   Reply With Quote
Old 05-12-2016, 11:15 AM   #38
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
kcowan's Avatar
 
Join Date: Jul 2006
Location: Pacific latitude 20/49
Posts: 5,705
Send a message via Skype™ to kcowan
Because we have been retired for 14 years, we would rely on portfolio margin because we have no debt. We needed a credit card for an emergency hospital visit last year (infected spider bite). When the insurance kicked in, they wrote us a check to repay it.
__________________
For the fun of it...Keith
kcowan is offline   Reply With Quote
Old 05-12-2016, 11:19 AM   #39
Thinks s/he gets paid by the post
ExFlyBoy5's Avatar
 
Join Date: May 2013
Posts: 1,977
Quote:
Originally Posted by REWahoo View Post
In 2008 thousands of people didn't have to go to the movies to see it:

When the Bank Freezes Your Line of Credit

Bottom line, a HELOC isn't always a reliable source of 'reserve money.'
I am not under any illusion that the HELOC will be available to me indefinitely. I have funds available, but they are currently working for me, so they are not easily accessible..at least not for about 3 business days.

I am also not too concerned about the HELOC being closed or reduced. I have a balance of ZERO and even if I MAXED it out, it would be less than 25% of the FMV of my house. And it's with PenFed, whom I trust to not close an account much more than I would with a big mega-bank.
__________________
Founder and Head Lounger @ The Life of Leisure Institute
Retired in 2014 at the Ripe Age of 40.
ExFlyBoy5 is offline   Reply With Quote
Old 05-12-2016, 01:14 PM   #40
Thinks s/he gets paid by the post
 
Join Date: Jun 2014
Posts: 1,035
I keep my emergency fund in emerging markets. I think the philosophy of putting rainy day funds in safe assets is silly.


Sent from my iPhone using Early Retirement Forum
__________________

__________________
dallas27 is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Reserve Armed Forces pension choice Bimmerbill Young Dreamers 6 08-18-2007 06:47 AM
Strategic petroleum Reserve, has it been re-filled ? Lakewood90712 Other topics 13 10-22-2006 09:32 PM

 

 
All times are GMT -6. The time now is 06:42 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.