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Old 03-14-2015, 06:41 PM   #21
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My solution for parking cash includes Audrey 1's online MM accounts. I use Ally--about .9% and immediately available with a transfer to local bank. Also not quite as immediate but pretty quick is Vanguard's Short Term Corporate bond. Yielding about 1.8 %. Certainly not risk-free but pretty stable and tradable as an ETF (VCSH). I think if you hold in a Vanguard account you can even get check writing on it.
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Old 03-14-2015, 07:28 PM   #22
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I consider the money in "safe" vehicles to be part of my fixed income allocation for total portfolio. I like to spread it around. Some of it sits in a checking account earning bupkis. Some is in I bonds. Some is in various CDs (I buy whatever is a good deal, from 1 year to 10, but always with a reasonable early surrender penalty). I also keep a large, untapped HELOC. Generally speaking, my CDs and I bonds have earned well in excess of the yield on offer from a 10 year treasury over the last 5 years. Shop carefully and be ready to pull the trigger when a deal pops up (and they do), and you can do pretty well keeping up with inflation and taxes in CDs.
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Old 03-14-2015, 07:36 PM   #23
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We have cash in Barclays bank and TIAA CREF. Makes between 0.8 and 0.95%. Rare for us to have less than a year and a half living expenses in there, mostly have more. Oddly enough, the lesser amount is about what a medical adventure would have cost sans insurance.

The cash washes in and out as we make loans - a loan we made 5 months ago is about to pay off - we will make 7% on an amount greater than what we have borrowed from PenFed on our houses. So in 5 months we will have paid for all the interest a year of the PenFed loans charge, plus made 4% on the money in less than 1/2 year. Do a few deals like that and you don't mind sitting on a stack of cash. Not risk free, but something we are used too.

I like cash - lets us take advantage of deals as they come up, and the borrowing we did on our places effectively means we can have our equity making money and have cash in the bank - no need of the HELOC. Things would have to be pretty bad for us not to be able to meet our obligations. Like to think that using our Fidelity cards for everything possible and getting a 1 1/2 - 2% credit is like saving the amount we spend and earning 1 1/2 - 2%.
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Old 03-14-2015, 07:44 PM   #24
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Peace of mind is also worth something. I keep about 10% in cash. Maybe 30% or so is in CDs of varying terms. I work in a tough industry and layoffs have been a fact of life for several years. I feel better knowing I have a cash cushion as large as I do.


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Old 03-14-2015, 09:22 PM   #25
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Audrey I fail to see the complexity with puts or covered calls. It may be beyond your understanding but it isn't that hard. Not sure when hedging became a bad thing esp for so called risk averse people. If I really wanted to get froggy with it, I would have said throw a collar on it.

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Old 03-15-2015, 12:26 AM   #26
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Life is too short.......
Audrey, you are one of the people I regard as most knowledgeable about finance on this board. If anyone understands these concepts, you are at the top of the list. Just ignore the ill-informed comment (perhaps based on stereotypical assumptions about women).
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Old 03-15-2015, 01:06 AM   #27
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If anyone understands these concepts, you are at the top of the list.

I'm pretty sure Audrey has no idea about any of the stuff I was talking about other than the generic "Options are scary...options are risky" talk that I have seen, if that, which is fine. I also know next to nothing about nuclear propulsion, but I don't go bashing the concept.

The comment has nothing to do with her gender, and everything to do with her comment about options and hedging:

Yeah, right, a lot of folks here are going to jump in with puts and covered calls to hedge their investments. Give me a break!

I challenge her to explain why hedging is bad or what is so difficult about 2 of the most simplistic strategies, and now life is too short and she needs a break.
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Old 03-15-2015, 01:20 AM   #28
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The issue I see with selling covered calls and/or puts is that your safety net fails you should the market drop 10% and then keep dropping.

Either way you are down a lot of cash, just when you might need it if the market then stays down or flat for the next couple of years.

I have no issue with using options as part of my investment mix, but I don't consider that part my emergency cash part.
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Old 03-15-2015, 04:42 AM   #29
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Hmmm. All that concern about earning 1-1.5 % on that cash you have laying around that bothers you all. If you have cash, like I do often, available to take care of many monthly costs or needs, I offer cash rather than a credit card and it saves the business most times anywhere from 3-5% off the top on transaction costs. Take in consideration other financial business costs which can be another % or two and when I offer to pay in cash for a 3-4% discount, many times it is very well accepted. Soooo, see, my cash earns/saves me easily 3-4% and I don't have the worry, time consumption and other headaches some of you others are stressed out all about.


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Old 03-15-2015, 05:19 AM   #30
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Hmmm. All that concern about earning 1-1.5 % on that cash you have laying around that bothers you all. If you have cash, like I do often, available to take care of many monthly costs or needs, I offer cash rather than a credit card and it saves the business most times anywhere from 3-5% off the top on transaction costs. Take in consideration other financial business costs which can be another % or two and when I offer to pay in cash for a 3-4% discount, many times it is very well accepted. Soooo, see, my cash earns/saves me easily 3-4% and I don't have the worry, time consumption and other headaches some of you others are stressed out all about.


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Interesting idea. What kinds of businesses and transactions are you talking about? Big ticket? Daily items? I cannot imagine the clerk at a grocery store has the authority to give you a discount. None-the-less I'm intrigued.
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Old 03-15-2015, 06:10 AM   #31
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The issue I see with selling covered calls and/or puts is that your safety net fails you should the market drop 10% and then keep dropping.

Either way you are down a lot of cash, just when you might need it if the market then stays down or flat for the next couple of years.

I have no issue with using options as part of my investment mix, but I don't consider that part my emergency cash part.
+100

Exactly why it's a bad strategy for cash you might want next week/month/year(s).
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Old 03-15-2015, 06:46 AM   #32
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If anyone understands these concepts, you are at the top of the list.

I'm pretty sure Audrey has no idea about any of the stuff I was talking about other than the generic "Options are scary...options are risky" talk that I have seen, if that, which is fine. I also know next to nothing about nuclear propulsion, but I don't go bashing the concept.

The comment has nothing to do with her gender, and everything to do with her comment about options and hedging:

Yeah, right, a lot of folks here are going to jump in with puts and covered calls to hedge their investments. Give me a break!

I challenge her to explain why hedging is bad or what is so difficult about 2 of the most simplistic strategies, and now life is too short and she needs a break.
I think it's time for everyone to take a step back. Personalizing like this rarely leads to a positive discussion. We're a friendly bunch here and are passionate about early retirement. Let's leave the dueling and challenges to others.
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Old 03-15-2015, 06:58 AM   #33
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Some of them are just beyond what I could possibly do. My credit union is in there, but you need to make 30 transactions per month. That means I'd have to use the card 10 times each time I go out of the house, hehe! And some of them require a certain dollar amount, and I just don't spend that much money, especially since DW holds the grocery budget, and uses her card on that.
Ah one of those. Maybe the CU as mine. This concept of making transactions and bowing down to their debit card god actually has me getting away from that particular CU. Same CU called me up the other day distressed that I'm liquidating my lousy CD and moving it somewhere else. They implored me to talk to their financial advisers. Blah.

Last month PNC was having a deal on new accounts with a bit more than 1% in money market for 1 year. They may still have it. We have some there for quick quick cash and then will probably move on next year.
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Old 03-15-2015, 08:20 AM   #34
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......explain why hedging is bad or what is so difficult about 2 of the most simplistic strategies, and now life is too short and she needs a break.
I don't think hedging is bad or necessarily difficult, but the few times I have explored hedging my portfolios I have found it to be quite expensive and I decided that I was willing to retain the risk rather than pay for cost of the hedge.

Beyond that though, your comments suggesting that understanding hedging might be beyond some members' understanding was just plain rude and unnecessary.
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Old 03-15-2015, 09:43 AM   #35
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The issue I see with selling covered calls and/or puts is that your safety net fails you should the market drop 10% and then keep dropping.

And what happens when you throw a put on it and make it a collar? Oh, wait I know:

You'll be down about 3-5% max. Max draw down is about 8% in the worst of conditions, and yes I'm talking October 87 bad. Go to page 4.

CBOE

Average annual returns of 7% I think is worth the risk of a max potential DD of 8%.
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Old 03-15-2015, 09:48 AM   #36
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Why don't you give it a rest and take that discussion elsewhere. The thread topic is about options for emergency cash. Insisting on this theme of collars and options is hijacking the thread. Let's get back on topic.
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Old 03-15-2015, 09:54 AM   #37
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Everything sounds and looks real rosey at this time. I think the only thing that can through a wrench into your finely tuned ( I use this word because your into music) machine is your health going forward. If you can predict that and the weather at the same time, you have no worries I would say no might do a "worst" case experiment on a health problem situation that may be somewhat real from information of pass family history data and see h


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Old 03-15-2015, 09:59 AM   #38
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Interesting idea. What kinds of businesses and transactions are you talking about? Big ticket? Daily items? I cannot imagine the clerk at a grocery store has the authority to give you a discount. None-the-less I'm intrigued.
The one we use, is our dentist gives a 10% discount for cash. I too would love more information on other places this works at.
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Old 03-15-2015, 10:05 AM   #39
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I have used cash/check to get 15%-25% discounts on many big tickets expenses. Saved that much on dentist, eye doctor bills, lawn services, exterminator services, house when I got it painted inside and out, new roof cost and a "minor" surgery bill which I saved almost 50% on which saved over $750.00 dollars on that alone. This technique AND to read a book entitled " How to Negotiate Anything??"

Tells you about the things you can negotiate from of course cars, appliances, furniture and hundreds of other items including many services. It also tells how many of these can be paid by cash or checks that include substantial discounts.


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Old 03-15-2015, 10:16 AM   #40
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I have used cash/check to get 15%-25% discounts on many big tickets expenses. Saved that much on dentist, eye doctor bills, lawn services, exterminator services, house when I got it painted inside and out, new roof cost and a "minor" surgery bill which I saved almost 50% on which saved over $750.00 dollars on that alone. This technique AND to read a book entitled " How to Negotiate Anything??"

Tells you about the things you can negotiate from of course cars, appliances, furniture and hundreds of other items including many services. It also tells how many of these can be paid by cash or checks that include substantial discounts.


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Thanks. Appreciate the explanation. These kinds of things make sense, but I haven't executed the technique personally. As you have pointed out, this demonstrates the value of having cash on hand. I'll look into the book.
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