How many months of cash in your portfolio do you keep?

[NW-Bound]

(Cash+I-Bond) / (last 12-month expenses) = 7.5 years.

 

[Blue Collar Guy]

I used the same method but was selling bonds -- both to transfer money to checking account and to re-balance to my target equity percent. When the market tanks, unless you have very high or 100% equity you would normally not be selling equity.

Caveat - during '08 and '09 I was selling massive amounts of equity and buying more massive amounts of equity to harvest losses for tax purposes. In terms of allocation management I generally treat that as a non-sale but rather a net purchase.

Ok, Hahaha, ty never thought about selling the bond part, thanks.!

 

[LOL!]

Did you employ this method in 2007-2009 during the downturn? Selling equities back then was a bit costly. Or is this post crash. I wasnt in here back then so I dont know how your portfolio was handled back then.

I switched from full-time work to half-time work in 2007, so my withdrawals were lower.

If I sold equities, then I simply bought equities in another account by exchanging from bond funds. And I certainly rebalanced in 2007-2009 by exchanging from bond funds to equity funds all along the drop. In the same way, I rebalance from equities to bonds when stocks go up beyond my target allocation.

In essence selling is never costly for me.

 

[Blue Collar Guy]

If we are counting CD's the same as cash in this thread (checking, etc) then I have a lifetime of cash available at my current annual spend rates.

, A lifetime of cash, Thats awesome. I think you have definitely arrived.

 

[Blue Collar Guy]

I switched from full-time work to half-time work in 2007, so my withdrawals were lower.

If I sold equities, then I simply bought equities in another account by exchanging from bond funds. And I certainly rebalanced in 2007-2009 by exchanging from bond funds to equity funds all along the drop. In the same way, I rebalance from equities to bonds when stocks go up beyond my target allocation.

In essence selling is never costly for me.

Ahh, This is something I could definitely live with. Thanks Im not in the withdrawal stage and I probably should be in the re-balance stage. I think back when I formulated this whole plan I was going to re-balance once a year during Christmas week.

 

[wmc1000]

Retired and currently reinvesting Divs as we have approx. 12 mos. of cash in checking/savings at the present time. Savings at Discover 1.15%

 

[retired1]

Do CDs count as cash ? If yes I've too much cash on hand (~10% of 800k). Otherwise I have about ~5% and even that I believe is too much. That tells that I'm not doing a good job making my money work harder :0

 

[retired1]

Retired and currently reinvesting Divs as we have approx. 12 mos. of cash in checking/savings at the present time. Savings at Discover 1.15%

Me too.. Savings spread at Discover, Ally, and Capital One (little less than other two).

 

[Rustic23]

3.5 to 4 years

 

[Blue Collar Guy]

As usual I cant post a simple answer, I feel compelled to elaborate. I have on auto pilot every WEEK, $ X,XXX going into equities from my Vanguard Intermediate-Term Investment-Grade Fund Admiral Shares. They currently have about 6 years worth of living expenses. Add to this my checkbook with about 2 years living expenses. This checkbook gets about $3000 a month more than we spend( from my pension checks). I think we get a big fat zero interest on this thing. So about 8 years cash and growing every month.

Im glad someone brought this up, I need to see if a liquid CD would be worth looking into, it might, after taxes amount to a nice surf & turf dinner every year at some swanky joint.

 

[audreyh1]

As usual I cant post a simple answer, I feel compelled to elaborate. I have on auto pilot every WEEK, $ X,XXX going into equities from my Vanguard Intermediate-Term Investment-Grade Fund Admiral Shares. They currently have about 6 years worth of living expenses. Add to this my checkbook with about 2 years living expenses. This checkbook gets about $3000 a month more than we spend( from my pension checks). I think we get a big fat zero interest on this thing. So about 8 years cash and growing every month.

Im glad someone brought this up, I need to see if a liquid CD would be worth looking into, it might, after taxes amount to a nice surf & turf dinner every year at some swanky joint.

Plenty of FDIC insured high yield interest accounts paying 1.2% or better just to get started.

 

[gayl]

I currently have 15k in brokerage (1 yr spending), 5k in Schwab checking (2 yrs property tax), + 12k in savings (1 yr travel). I add 1375 monthly ..... trying to stop. To that end, I've just adjusted dividends: will reinvest those in 3 accounts BUT take IRA dividends in cash

As posted on another thread, it's a difficult mine shift from saver to spender

 

[Blue Collar Guy]

Plenty of FDIC insured high yield interest accounts paying 1.2% or better just to get started.

Thank you the bride just found this, 1.31 % Money market guaranteed for 12 months. She will transfer 2 years worth of living expenses to this. After taxes thats $850 to spend. Thats a good chunk of change for a few mouse clicks.

 

[pb4uski]

I target 5% in cash which is 14-15 months of expenses. However, between my pension and cash dividends it could stretch to 20 months without having to sell any stocks or bonds.

 

[mathjak107]

i keep current year spending and a back up of 1 year as an emergency fund . not much real benefit holding cash buckets . in fact studies show using cash buckets provides worse performance than just rebalancing stocks and bonds and taking spending money that way .

despite the myth in our heads if markets fall you would not be selling stock . you would be rebalancing and selling bonds to develop spending money .in fact if we fell enough you would be buying stock .

this using cash instead of selling stock is a legendary myth .

but mentally many of us like doing it , self included

 

[DrRoy]

About 9 months at present.

 

[foxfirev5]

Cash averages about 4- 8 months expenses depending on when I take a distribution.
If you count CD ladders and Series I bonds as cash then it's about 15 years.

 

[imokurok]

Good topic. I think I'm on the cusp/OMY of going FIRE. Plan is to put quarterly CD ladder in place, then run up the score on cash savings. Stocks and mutual funds are great, until their not. Don't want to have to be cashing out at low prices when the big one hits, just want to continue to collect the dividends. While cash doesn't really grow sitting there safe, it doesn't create tax bill when accessed, and you know what you have in the reservoir regardless of what the market does. Interest rates and inflation so low, not much cost for the safety. So for us, it's the next key piece. CD's total = 2 yrs expenses. Cash saving goal prior to flicking the FIRE switch = 6 months expenses (not counting other income sources).

 

[Badger]

I don't know how much we have in terms of living expenses in months or years since all of them are covered by SS and pensions. We still live a frugal lifestyle and don't have many "wants".

My wife's RMD of about $16k that started this year is in a MM account and probably won't be used this year. My RMD which will be higher will start in 2019 and I don't see needing that either unless we schedule some international travel. Dividends from taxable and IRA accounts are swept into MM accounts so cash will increase. RMD is taken from the IRA MM accounts to avoid cashing IRA mutual fund shares.

At the moment there is about 18% in cash. I may increase that some by moving a few more IRA mutual fund shares to IRA MM since growing net worth is not a concern and I do have concerns about the stock market after 8 years of Bull market and present day politics. If the market goes Bear I may buy some shares back later.

This may not be the smart way to manage but I'm a bear of little brain and it lets me sleep at night.

Cheers!

 

[misanman]

We have about 1 to 2 months of living expenses in cash.

 

[davismills]

We have about 18 months of cash.

If pensions/SS are factored in the months would turn into 7 years of expenses covered.

 

[Red Badger]

Just curious why a safe deposit box and not an FDIC-insured interest-bearing account? Sure, rates are low currently but it's >0.

The banking system got pretty wobbly in 1929 and 2008. JP Morgan had to bail out the country before. The bank can limit withdrawals, etc. Yep - its probably too much, but we sleep better at night. Our equity portion of investments is somewhat aggressive.

 

[street]

I consider MM/CD as cash even if they make some interest each year. I would have 25 years in cash that would last us at the current WR we are taking. I'm also figuring in what we would receive from SS also. With cash and SS I have enough cash to never touch any investments.

 

[ugeauxgirl]

9 months maybe, but I'd dump half of that in the market if we saw a correction. We're still in saving mode though

 

[pb4uski]

....despite the myth in our heads if markets fall you would not be selling stock . you would be rebalancing and selling bonds to develop spending money .in fact if we fell enough you would be buying stock .

this using cash instead of selling stock is a legendary myth .

but mentally many of us like doing it , self included

+1 even though I know carring 5% in cash is suboptimal, for some reason it is comforting.... and the cost to total portfolio return is fairly minimal... in my case ~9-15 bps. I reduced my cash allocation from 6% to 5% about a year ago and may reduce it further in the future as I become more comfortable living off our investments. I think I'll definitely reduce it once we start SS as at that point our pension-type income sources will comprise about 70% of our spending (from ~18% now).