Hi! New and looking for advice on how much cash to hold

[TDub]

I watch the market every day just like I watch fish in an aquarium. Pretty fish, bumbling around, no rhyme or reason to it. More interesting than a lava lamp. I never look at or calculate our portfolio value.

This level of portfolio and market attention really appeals to me. Just out of curiosity, how do you get away with presumably making withdrawals but never checking up on the value of your portfolio? Wouldn’t that knowledge typically affect one’s WR?

 

[OldShooter]

This level of portfolio and market attention really appeals to me. Just out of curiosity, how do you get away with presumably making withdrawals but never checking up on the value of your portfolio? Wouldn’t that knowledge typically affect one’s WR?

Well, to be strictly accurate we look at the portfolio once a year between Christmas and New Years. Maybe one year out of three we will make a trade or two. Other than that it is just small trades when we need some cash and we plan where in the AA these will be made.

We have been very fortunate in life and we are also are fairly careful about how we spend. DW watches what is on sale at the grocery store for example and I typically buy toys and tools on CraigsList or eBay. Very rarely anything new. The result is that even with quite a bit of travel, we have more money than we will ever need. We just aged into RMD territory this year and it looks like our RMDs plus SS plus a tiny megacorp pension I have will be enough for us. So long answer to a short question, we do not withdraw based on portfolio value.

The other thought I'd offer is that portfolio value is fairly volatile, so watching it frequently really gets you only noise, no signal. Looking at trailing rate of return over a year or, better, five years and looking at an average portfolio value is really about all the real information that you can get. So ... we're back to our one-year review cycle. Or maybe we should switch to five years?

 

[HI Bill]

The result is that even with quite a bit of travel, we have more money than we will ever need. We just aged into RMD territory this year and it looks like our RMDs plus SS plus a tiny megacorp pension I have will be enough for us.

Splurge a little. Check out the Blow that Dough thread. Robbie is my idol!

 

[aubailey]

two suggestions---dump the FA and work 6 more years and it sounds like you would be in good shape. Put cash in any mutual fund money market.

 

[aida2003]

I hear you all on the FA but there are other reasons we use him which I didn't go into because I wasn't looking for advice on whether to have an FA or not.

First, my husband owns a business and needs to have someone manage his company's 401K. This FA handles that for him. So we have to pay someone to do that job anyway. The previous person he used was awful, too old, and did everything with paper and pencil and got my husband into things that were horrible investments just to pad his wallet. Anytime I asked a simple question (like maxing out his after tax contributions to his 401K and rolling that to a Roth as soon as we retire), the previous guy had no clue.

Second, this FA has also helped us with setting up custodial Roth IRA's for my two kids and they don't charge the 1% on that.

Third, we tried Fidelity. Numerous times. They were worthless. They could not give us any advice as they are not allowed to give stock advice.

Fourth, he has made some good investment decisions...things we never would have looked at. I have some stocks that are up 40% in the 14 months we have been with him. The portfolios that are invested are doing very well.

I think the old timers are missing the point here on this thread.
The OP clearly states that they don't want to dump this FA. Considering their wealth (in addition to the savings, they own a business, rental properties, etc. so they're really well off, it sounds), I think it's worth the money to pay that 1% to the FA. If they believe it's money well spent, it's their right to keep the FA. Y'all already did a good job to dissuade her .

What is not clear to me, whether the AA in stocks means individual securities or stock funds or a mixture of both. If they have some 'play money' in stocks, it's not bad either IMO, unless all 66% is in individual stocks.

Finally, I feel that the OP quibbles regarding the $125k cash only, but not the rest of the cash they hold. To put this $125k in the perspective of their total wealth (beyond $2.6M), that sounds like she's worried 'about peanuts' (really). Like somebody else stated already...it's sort of 'insurance' and I don't think anybody has had a great return of such instruments.
Somebody will win by timing the $125K. Either the OP convinces the FA to invest her $125K right now and the stocks keep going on, so she sees a better return or perhaps the FA is right for holding and waiting for bargains coming his way... Flip a coin and you might have an answer for that