Anyone in All Cash?

[emi guy]

I have been exploring the possibility of going all cash, even though I am years away from early retirement. Are any of you retirees all cash right now? How about those of you with years to go, like me? I would be very interested in reading about the assest allocation of all cash positions. I know that CD ladders are common as well as various bond fund allocations. Thanks in advance.

 

[rescueme]

Retired? Yes.

All cash? No (never have been - probably never will).

Sorry, nothing to offer ...

 

[calmloki]

I have been exploring the possibility of going all cash, even though I am years away from early retirement. Are any of you retirees all cash right now? How about those of you with years to go, like me? I would be very interested in reading about the assest allocation of all cash positions. I know that CD ladders are common as well as various bond fund allocations. Thanks in advance.

Don't consider myself retired yet, but we have about 40% of our assets in CDs, savings accounts, loans, and gold. The rest is in rental real estate with the exception of a wee percentage in stocks. We were lucky enough to get in on the PenFed CDs back when they were paying 6.25%; went for a three year term. Have recently rolled those over to PenFed 5 year CDs at 4% with the thought being that they will pay better than 2 year certs even if we bail out at the two year mark. Have more than the CD value sitting in CapOne accounts earning a massive 1.4%. The dab of gold is up and down. Remainder is in private loans that juice up the overall percentage to about 4.25%. Hoping that an unsecured loan we made doesn't go totally bad - it's not performing to par right now.... If it goes bad we will be closer to 2% return overall on the cash. Sure there are sharper tacks out there in the cash wheely dealy world than this pilgrim.

I continue to appreciate rent paying tenants.

 

[W2R]

I am retired, and have 11% cash which I think is way too much. My bond funds give me nice income. My cash gives me nothing and is so vulnerable to inflation.

So, I am thinking about putting 1/4 to 1/2 of it in bond funds, even though a rise in interest rates will push down bond fund share prices. I would still get the dividends. Just don't know when to pull the trigger on that - - my inner market timer is screaming "Nooooooooooo!!!"

 

[easysurfer]

I won't be going all cash until I reach 100 years old

I suppose, if you were totally risk adverse and have such a large portfolio that you can afford to sit on a huge pile of cash and not have to worry about the effects of inflation, then go for it.

But to try to outguess if now is a time to be call cash (or all stocks or all bonds) is pretty much just rolling the dice with real money.

As for myself, I keep some cash back in a money market fund. I treat this outside of my asset allocation. This fund serves as my emergency reserve and my own simulated paycheck that I auto withdraw from this and put in my checking account each month. For example, at the start of the year, when I rebalanced, I sold some equities at a gain and used that to replenish my money market fund.

 

[freebird5825]

Um...I'm confused.
Are bond mutual funds being considered to be equivalent to "cash assets" in this thread?

 

[W2R]

I won't be going all cash until I reach 100 years old

I suppose, if you were totally risk adverse and have such a large portfolio that you can afford to sit on a huge pile of cash and not have to worry about the effects of inflation, then go for it.

But to try to outguess if now is a time to be call cash (or all stocks or all bonds) is pretty much just rolling the dice with real money.

I don't like the idea of putting ALL of one's nestegg in any one thing. We had someone recently who wanted to put all in junk bonds. We have had others who wanted to put all in gold. Now here's the idea of putting all in cash.

Like bonds, stocks, commodities, and other investments, cash has its own risks. Inflation comes to mind, as just one example.

Diversification is a fundamental principle of sound investing, and it is so for a reason. If someone does not agree with this, I would urge them to read Bernstein's "Four Pillars of Investing". Read it twice, or even three times. Although it is frightfully boring, I did that and I think it is good for us, whether we like it or not. It imparts a good deal of common sense.

 

[W2R]

Um...I'm confused.
Are bond mutual funds being considered to be equivalent to "cash assets" in this thread?

I didn't think they were? I mentioned them after saying that I had too much cash and wanted to spend it on bond mutual funds. Would anyone consider bond mutual funds as being the same as cash? I sure wouldn't. I couldn't take a bond fund certificate to the corner market and buy a pack of tic-tacs paying with it, which to me means it doesn't pass the liquidity criterion. Maybe I'm off on a tangent or something.

 

[freebird5825]

I didn't think they were? I mentioned them after saying that I had too much cash and wanted to spend it on bond mutual funds. Would anyone consider bond mutual funds as being the same as cash? I sure wouldn't. I couldn't take a bond fund certificate to the corner market and buy a pack of tic-tacs paying with it, which to me means it doesn't pass the liquidity criterion. Maybe I'm off on a tangent or something.

I get confused easily...

 

[W2R]

I get confused easily...

Join the crowd.... I am still trying to figure out that debate on what is real retirement and what isn't!

 

[rescueme]

Would anyone consider bond mutual funds as being the same as cash? I sure wouldn't.

Neither would I (or my DW).

Our cash is included in our overall AA/portfolio for measurement purposes, but they are not considered in the same context as bonds. However, they are closer to bonds (IMHO) in their actions than to direct stock and equity funds would be.

Most discussions revolve around a target AA (such as our 60/40) representing equity "types" and bond/cash "types". Once in awhile, you will see something like a 40/40/20 (equity/bond/cash), but that's not very common use, as I see it....

 

[Purron]

Join the crowd.... I am still trying to figure out that debate on what is real retirement and what isn't!

Yup. We love to debate fine points. BTW, I can't use the G-fund portion of my TSP to buy tic-tacs but I still consider it cash

 

[DangerMouse]

We are probably close to 50% cash, tend not to bother with bonds much at all. We are able to get 7% on our cash we hold in the bank in Australia.

 

[haha]

We are probably close to 50% cash, tend not to bother with bonds much at all. We are able to get 7% on our cash we hold in the bank in Australia.

Is this an Australian dollar account, or USD? Even if it is AD, it leaves plenty of room for any possible currency loss, which is jsut as likely to be a gain anyway.

Sounds very good!

Ha

 

[plex]

Completely 100% cash/cash equivalents is actually pretty risky for someone who is retired. And it is uncompensated risk on top of that.

 

[FIREd]

I am years away from retirement. I've always had a much more conservative AA than what financial advisor typically recommend for people my age (35). Currently, my AA is roughly 49/38/13 stocks/bonds/cash. The cash is part USD, part Euros. I rarely hold cash at all (I had less than 1% in cash last year), but I have been building up my cash position since last summer in case I get another opportunity to buy more assets on the cheap. Right now, there is just too much uncertainty for me to feel comfortable plowing 100% of my money into any one asset class.

 

[JustNtime]

I put MOM's entire IRA into 7yr Penfed CDs at 6.25% in 2007.< Mainly to get her away from the sleasy Valic guy who kept trying to sell an 80+ yr old woman high cost annuities.> She's good to go until 2014. Unless rates go above that before then. She's allowed to rollover into a better CD, if the rates get higher. A very good deal. Easy for her to understand and no stress from market swings.

Personally, I opted for more diverse investments. Alot to be said for simple though. I guess I'll see in 2014, if I can beat her return. <IF the world doesn't end in 2012, of course.>

 

[Bestwifeever]

I think there are/were some people on here who had CD ladders to go with their pensions and SS as their retirement financial strategy, so that would be all cash imho. I don't consider bonds to be cash.

We were in all cash for several months after rolling over the 401k into an IRA, but now have allocated it into equity and bond funds (and maybe 30 percent cash, which includes several years of living expenses).

 

[DangerMouse]

Is this an Australian dollar account, or USD? Even if it is AD, it leaves plenty of room for any possible currency loss, which is jsut as likely to be a gain anyway.

Sounds very good!

Ha

It's Australian $'s. We don't really try and play the exchange rate game, because I am sure if we tried we would lose. For us, we have hedged our bets by keeping some $s in Oz which is our home currency, some in Pounds Sterling to cover us if we move to Europe (should have gone to Euros but that horse has bolted), then we have small $s in US. This strategy only works for us because we are undecided where we will eventually end up.

 

[Alan]

We are retired (just) and allocation is 35% equities, 53% bonds, 12% cash.

Expect to be using lots of cash over next few years with lots of major travel plans lined up. I would think the cash will slide to 10% and bonds up to 55% over the next few years.

Note that I have a non-COLA pension that should cover most of the basic needs.

 

[Steve O]

36/53/11 Stocks/Bonds/Cash, I sold Vanguard high yield corporate today after a nice gain last year

I like to think Im retired but at 41 I have a LONG way to go

 

[Hamlet]

Our allocation--

95% equities
5% cash

Bonds seem pretty silly at current rates when you have a mortgage at 5.5%

We're paying down the mortgage instead of buying bonds.

I'm 37.

Bonds will probably enter the picture in 10 years or so, depending on their relative attractiveness.

 

[tulak]

Our allocation--

95% equities
5% cash

I was 90/10 and went to about 95/5 when the markets plummeted in early 2009. Downside to holding too much in equities is that you can't buy as much on the dips.

I'm now at 80/20. If the markets drop again, I have more cash available to buy equities.

 

[easysurfer]

Just thinking aloud ...

On asset allocation, is it better to have some cash held back to buy equities if the market does drop? Or if you have the cash on hand, then maybe that wasn't the proper allocation in the first place?

 

[Meadbh]

I had a stash of cash, but I used it to buy some real estate.
I do plan to build up a significant cash or cash equivalent reserve prior to RE. That way I can self annuitize for the first few years when the risk of sequence of returns is greatest. But all cash? All anything? Noooooooo!