Best method of withdrawing money?

[obgyn65]

Pardon my ignorance but what is a sinking fund ?

Quote:

Originally Posted by gsparks2 I have direct deposit to checking of pension and 401k distributions. Dividends go to money market account I use for sinking fund for large planned and unplanned expenses. a significant portion of pension/401k also goes to sinking fund.

[Brett_Cameron]

that is what I call it. It is an accounting term I think but it is a method allocating periodic sums to accumulate for a future large expenditure. I may be using it wrong.

[scrabbler1]

Quote:

Originally Posted by gsparks2 that is what I call it. It is an accounting term I think but it is a method allocating periodic sums to accumulate for a future large expenditure. I may be using it wrong.

I recall from my college accounting class (decades ago) the same thing. The example I remember described the term "bond sinking fund" as a business setting aside every year a portion of the principal of a bond it had sold so by the time it came time to pay it off it would have the money already there.

[WM]

This is a great thread, I was hoping to find an updated version of what everyone does with their cash, and here it is! I'm surprised to hear that of the people who mentioned it, people seem to keep only about 4 years' cash expenses. I think I'm surprised because the "buckets" strategy calls for more like 7-10 years, doesn't it? Is that just overkill? Would you keep more cash if interest rates were higher?

[samclem]

Quote:

Originally Posted by WM Would you keep more cash if interest rates were higher?

I'm helping to manage a portfolio for an older relative and the low interest rates have caused us to scale way back on the bond holdings. Much of that bond allocation is now in cash instead, so (at least in this case) the lower interest rates have served to increase the allocation devoted to cash.