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Old 11-19-2019, 09:41 PM   #21
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It is true that it takes a couple of days to move money out from a money market fund at my brokerage to buy a stock. In that sense, it is not as liquid as settled cash that allows me to buy some stock shares right now.

However, I can still buy shares without the "real" cash in a margin account, and move the money later to pay for it. In before-tax accounts, I can use the money market funds as collateral to sell cash-covered puts, which has the same effect as buying the stock shares. Bonds cannot be used to back cash-covered puts.

And I do keep a couple percent in "real" cash, which pays a lousy 0.05% interest.
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Old 11-19-2019, 11:02 PM   #22
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Originally Posted by WyomingLife View Post
I’m at 65/30/5, where the 5 is cash.

A reputable firm just suggested to me that, when assessing AA, cash not be included. They think I need to be 50/50 (for a variety of relevant life considerations), not including cash. So I am being advised that 65/30/5 is fairly aggressive for my situation.

So is cash included or not in AA? I am confused.

(This Q has likely been asked and answered 10,000 times here already, so apologies in advance for this post.)
I deliberately hold cash as part of my AA. It’s a key piece of my diversification. In some analyses I lump it in with my fixed income which holds some short-term and mostly intermediate term bond funds. So within fixed income I’ve made sure to have some diversification across maturities including 0 duration. But on the other hand, cash behaves differently from bonds under various conditions, so it can be useful as a diversifier against bonds as well as stocks.
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Old 11-20-2019, 06:57 AM   #23
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Fidelity is a "reputable" firm. Here's their take on asset allocation vs. risk. (Spoiler: They count cash).

https://www.fidelity.com/viewpoints/...cessful-saving
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Old 11-20-2019, 07:06 AM   #24
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Iím at 65/30/5, where the 5 is cash.

A reputable firm just suggested to me that, when assessing AA, cash not be included. They think I need to be 50/50 (for a variety of relevant life considerations), not including cash. So I am being advised that 65/30/5 is fairly aggressive for my situation.

So is cash included or not in AA? I am confused.

(This Q has likely been asked and answered 10,000 times here already, so apologies in advance for this post.)
I consider cash to be part of my fixed income. And when I say cash, I mean cash literally (savings and MM accounts). While CDs and I Bonds are also FI, I do not consider them cash.

Keep it simple. Anything that isn't a hard asset or equity is fixed income.
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Old 11-20-2019, 07:27 AM   #25
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As others have said, to me there are equities and then everything else. I’m at 60/40, no third number. Cash is definitely included in the 40. In that 40, there is some real cash but mostly, there is about two years worth of living expenses in pretty liquid investments - 3 month CD’s.

I look at the percentages as risk/very limited risk. Currently @ almost 59 yrs old and three years into retirement, I’m comfortable having 60% subject to the riskier investments.
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Cash as part of AA
Old 10-02-2020, 10:15 AM   #26
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Cash as part of AA

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As others have said, to me there are equities and then everything else. Iím at 60/40, no third number. Cash is definitely included in the 40. In that 40, there is some real cash but mostly, there is about two years worth of living expenses in pretty liquid investments - 3 month CDís.

I look at the percentages as risk/very limited risk. Currently @ almost 59 yrs old and three years into retirement, Iím comfortable having 60% subject to the riskier investments.


Fyi. CDís are considered cash by accountants and FAís. They are bank accounts and will never lose their initial principle hence they meet the definition of cash.
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Old 10-02-2020, 10:18 AM   #27
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2yrs of living expenses in 3 mo CDs sounds painful.
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Old 10-02-2020, 11:15 AM   #28
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I have browsed this thread several times and continue to be amazed by the number of people who consider this to be an important question. The OP was just asking for opinions, not attempting to set up a cage match.

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... they meet the definition of cash.
I am also a little puzzled by statements like this. Is there a stone tablet somewhere that I have missed?

I think the appropriate attitude towards this kind of question was exhibited in Through the Looking Glass: "When I use a word," Humpty Dumpty said, in rather a scornful tone, "it means just what I choose it to meanóneither more nor less." I know what I consider to be cash and really don't care what criteria others may use for identifying their "cash." We are all right.
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Old 10-02-2020, 11:54 AM   #29
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2yrs of living expenses in 3 mo CDs sounds painful.
Really doesnít matter if you have more than enough.
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Old 10-02-2020, 12:26 PM   #30
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Really doesnít matter if you have more than enough.


Thatís very true but a lot of folks are not that fortunate. Iím helping a family member now....Plus the difference between nothing and practically nothing is minor but itís still painful for me to contemplate my deposits being disrespected.
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Old 10-02-2020, 02:10 PM   #31
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I include cash in my AA, counting everything in checking/savings/MM accounts as cash.

However, I do have a Mass Mutual life insurance policy with a fair amount of cash value. I do not know how to count that.
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Old 10-02-2020, 02:46 PM   #32
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... However, I do have a Mass Mutual life insurance policy with a fair amount of cash value. I do not know how to count that.
FWIW, I include my CSV in fixed income... mine paid about 3% last year (2019-2020).. that is:

"interest" = increase in CSV for the year less premiums
average balance = beginning of year balance + 50% of premiums

and that is conservative in that it attributes zero value to mortality coverage since I consider it to be fixed income in my AA.
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Old 10-02-2020, 03:06 PM   #33
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I've always included cash and cash equivalents in my AA.
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Old 10-02-2020, 03:21 PM   #34
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Thatís very true but a lot of folks are not that fortunate. Iím helping a family member now....Plus the difference between nothing and practically nothing is minor but itís still painful for me to contemplate my deposits being disrespected.
Interest rates were better last fall...when the post you commented on was made. But you weren't the one who bumped an old thread.
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Old 10-02-2020, 04:14 PM   #35
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I've always included cash and cash equivalents in my AA.
I include them too. If I don't, my numbers are incomplete.
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Old 10-02-2020, 04:37 PM   #36
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Due to a series of unfortunate events we are at 31% in cash right now. Sure hope I can include it in my AA, 'cause I don't think I could take the emotional hit from not including it.
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Old 10-02-2020, 04:44 PM   #37
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I count everything except primary residence in my "invested" assets. Not sure how to define "cash." Obviously, checking account and any bank savings/CDs etc. I have a significant investment in a GIF (guaranteed income fund) which acts like bonds or cash, depending. Oh, the "fistful" of dollars I keep on hand, I do not count either as cash or investment. It's an insurance policy (we DID have an 18 hour Island wide electrical outage a few years back. Cash was king but YMMV.)
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Old 10-02-2020, 04:57 PM   #38
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Some of us don't count certain cash as part of our investment portfolio. Just semantics to some.
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