Before I was retired, I kept very little cash in the bond/cash portion of my AA.
Now that I'm retired, I've adjusted my MM holding to the current years gross expenses (includes 15% taxes) along with another three years in MM accounts. That means the beginning of this month, I had 4 years of gross income in MM accounts.
By December (when I do my "harvesting" for 2009), I'll determine if I had any "profit" (e.g. holding gains) during the year. If I don't (possible), I won't replenish my current year's MM account, and I'll tap my 3-year holdings for next years income. Assuming the market returns to "normal" (whatever that is) by the end of 2009, I'll replenish my MM accounts (up to the max of 4 years holdings a/o Jan 1). If not, I'll continue to tap the MM accounts.
I'm counting on this market to turn around within 4 years with my "method", before I would have to sell any of my fund holdings.
Again, my view is a bit different being retired. Most, especially those still wor*ing would have more in bonds rather than cash in their AA. That's understandable under the conditions. Since I'm looking for retirement income stability, I'm more comfortable with the cash.
BTW, I've split cash holdings between Vanguard/ Fidelity. Fidelity MM (FDRXX) is a bit ahead of Vanguard, but I'm sure they go back/forth on an ongoing basis.
- Ron