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View Poll Results: The Amount of Cash I had or planning to is:
Equivalent to 1 Year of my Yearly Expenses (or less) 49 20.94%
Equivalent to 2 Years of my Yearly Expenses 49 20.94%
Equivalent to 3 Years of my Yearly Expenses 54 23.08%
Equivalent to 4 - 5 Years of my Yearly Expenses 35 14.96%
More than 5 Years of my Yearly Expenses 47 20.09%
Voters: 234. You may not vote on this poll

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Old 09-12-2021, 07:24 PM   #61
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Originally Posted by tulak View Post
No, both are not down 50%. It's your choice if you want to spend the time to figure out how dividend yield works. Good luck!
A dividend is like a forced sell you have no control over. If a $1 dividend is paid out the fund or stock price drops $1 You are not $1 richer. They have just sold $1 and given it to you and called it a dividend. To make the matter worse the government thinks you have make a $1 when in real life you have made nothing.
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Old 09-12-2021, 08:45 PM   #62
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My 2 cents..
We are at 3.2m. Of that, 300k is CASH, 1.2m stable value/bonds, and the balance in stocks. Yep, 50/50. Strip out the CASH which serves the purpose of getting me to 59.5yo then the portfolio is 2.9m (55/45). W*rk ends 12/22 (saving 10k/mo all to fixed...taxable/Roth/pretax) and the CASH will cover 3.4yrs after that @92k/yr. At 59.5yo (in 4yr 7mo from now) the CASH will be gone. After that we will still need play the ACA income game so getting lots of CASH out will be limited by ACA income limits. We have another 300k in VWIAX taxable to help with flexibility. One of my thoughts is to "free up" another 200k from Roth for CASH purposes since the tax consequences are zero. However, that drops the AA and the only way to increase it is to add stocks to the pretax account.....pondering now!

Per my spreadsheet, the potential worst case CASH need (ie ACA subsidies go away), is a 200k shortfall between now and 65yo. If the ACA remains as is, then we will have a CASH surplus at my 65yo.

My main concern for a CASH balance is to control income for health insurance reasons. Now you know MY CASH needs until I am 65yo. I suspect that your CASH needs are different. Figure out what amount lets you accomplish whatever goal you have in mind AND sleep well at night when the market takes a dump.

FWIW, our base budget w/o healthcare or travel is 48k/yr. After my 65 year BD, I suspect 2 FULL budget years worth of cash will suffice. Perhaps that was the answer you wanted.
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Old 09-12-2021, 11:20 PM   #63
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Originally Posted by FANOFJESUS View Post
A dividend is like a forced sell you have no control over. If a $1 dividend is paid out the fund or stock price drops $1 You are not $1 richer. They have just sold $1 and given it to you and called it a dividend. To make the matter worse the government thinks you have make a $1 when in real life you have made nothing.
You buy a stock at $10 at the beginning of the year.
Over the year, the company makes $1/share profit. The share price correspondingly increases to $11/share. They decide to pay out 100% of their profits in the form of a dividend at the end of the year. You get a $1 dividend for the share you hold. The share price correspondingly drops from $11 to $10.
In the end you are left with $1 in dividends and a share worth $10. You made $1 didn't you?
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Old 09-13-2021, 12:08 AM   #64
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You buy a stock at $10 at the beginning of the year.
Over the year, the company makes $1/share profit. The share price correspondingly increases to $11/share. They decide to pay out 100% of their profits in the form of a dividend at the end of the year. You get a $1 dividend for the share you hold. The share price correspondingly drops from $11 to $10.
In the end you are left with $1 in dividends and a share worth $10. You made $1 didn't you?
I think so. Furthermore, if the company you invest in is well managed and happens to grow its business over the years, and correspondingly is able to prudently increase its dividends over the years, you in effect have an inflation protected income stream from the dividends. And your principal (investment in the stock) is also inflation protected because of the growing business.
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Old 09-13-2021, 06:29 AM   #65
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You buy a stock at $10 at the beginning of the year.
Over the year, the company makes $1/share profit. The share price correspondingly increases to $11/share. They decide to pay out 100% of their profits in the form of a dividend at the end of the year. You get a $1 dividend for the share you hold. The share price correspondingly drops from $11 to $10.
In the end you are left with $1 in dividends and a share worth $10. You made $1 didn't you?
You can buy I mutual fund one day before the dividend it pays out $1. The fund drops one dollar. You made no money. That is why people avoid buying before the dividend date. There is no money in doing so. Then you have to pay taxes on the dividend. So you lose money.
Now imagine the dividend is 10k-20k. You own the taxes on 10k-20k and you have made no money.
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Old 09-13-2021, 08:10 AM   #66
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I keep nearly nothing in cash, the same way I did when I was working. I hate the idea of tying up any significant amount of money earning zilch or nearly zilch. I have set up my ER portfolio so it will generate enough money every month (mostly from a big bond fund) to pay my expenses. My local bank's checking account has enough money to cover any fairly small minimum balance requirements plus another $500-$700 as a cushion to cover any smaller, unforeseen expenses. Any excess money gets invested somewhere, usually to the big bond fund.
This sounds like a great idea, a bit similar to what I do.
Except I invest excess monthly retirement income into stock funds, not a big bond fund...
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Old 09-13-2021, 08:13 AM   #67
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It is common sense if you account is down 50% anything that comes out is down 50%. It does not matter if it is a dividend or a sell. Both are down 50%
This is actually not true, as several others have pointed out...
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Old 09-13-2021, 11:02 AM   #68
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We keep minimal amount of cash.

BUT...we have pension income that will pay for all of our living expenses other than extended travel.

I have to believe that there is a significant difference when it comes to cash or cash like resources between those who have pension income and those who depend on investment income for retirement living expenses.
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Old 09-13-2021, 11:20 AM   #69
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I have to believe that there is a significant difference when it comes to cash or cash like resources between those who have pension income and those who depend on investment income for retirement living expenses.
For sure. No pensions here. We are fully self-funded prior to SS. I plan to have 2-3 years cash when I retire next year.
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Old 09-13-2021, 01:30 PM   #70
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What if you have a 50/50 AA?

Your cash/bonds aren't down 50%, only the stock funds, right?


I am confused. Your dividend is based on number of shares and not dependent on the value of those shares so why will your dividend decrease by 50%? What am I missing?
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Old 09-13-2021, 01:36 PM   #71
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Retired with 3 years living expenses in cash. In reality though, once I directed all dividends and taxable capital gains to my checking account instead of reinvested, that 3 years of cash goes much further. I expect to drop my cash allocation down to 1 or 2 years expenses once social security starts.
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Old 09-14-2021, 12:13 PM   #72
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This is actually not true, as several others have pointed out...
I guess I am slow to understand this one. Let's say I buy 100k in the SP 500 for a few days before the bear. Bear comes now it is worth 50k. Let's say the dividend is 1k to keep round numbers. They send me the 1k. My account total is now 49k. You are telling me I have no loss on the 1k they sent me? (I know for tax reasons it is not called a loss but a dividend.) I am talking real life not tax talk. Others feel free to jump in and tell me how my logic is wrong. My thinking is when they paid this out I lost 1k.(Because if I have left it in the market it would have gone back to 2k in time.) Now the market might go up in the future and I might lose less than 1k or nothing in future quarters. Unless I have built up gains dividends can create a loss to my account.
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Old 09-14-2021, 01:33 PM   #73
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You can't count on dividends continuing in a severe bear market like the Great Recession.

If the S&P500 or other broad stock market index drops 50% the reality is many companies will simply stop paying dividends altogether.
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Old 09-14-2021, 01:47 PM   #74
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I believe FANOFJESUS is correct.

The math needs to be done on the actual money without looking at the number of shares. Because of the dividend your portfolio changed from 100% stocks to 98% stocks and 2% cash. So now you have $49 in stock and $1 in cash. So now a 100% stock increase gives you $98 in stock and $1 in cash. A $1 loss because of the dividend.
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Old 09-14-2021, 09:37 PM   #75
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I have way more than 5 years of expenses in cash, because I hold very little bonds and use cash for my AA. And my WR is way low.

My cash yield is not bad, because I write cash-covered puts against it. I feel a lot more comfortable doing that than holding bonds.
How do you write covered calls on cash? Or are you buying the stock with your cash? Which is a good idea.
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Old 09-14-2021, 09:54 PM   #76
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I have 20 years of living expenses in cash which is 20% of my portfolio. I often think itís too much but itís basically safe and not a large percentage of the overall portfolio so I feel comfortable there.
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Old 09-14-2021, 10:04 PM   #77
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I thought I would be in the minority with 4-5 years of cash, but I see there are a bunch of idiots like me. Right now, cash is 22% of the portfolio but I plan to spend it down before SS, so unless the portfolio has a big decline, cash will be a declining percentage.
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Old 09-14-2021, 10:06 PM   #78
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How do you write covered calls on cash? Or are you buying the stock with your cash? Which is a good idea.
No, I wrote "cash-covered puts", and I should have said "cash-secured puts".

The cash is there to back up the puts that I write. If the stocks drop more than I anticipate, the puts get assigned and I have to buy the stocks. This itself is not necessarily bad, because it forces me to buy low.

If the stocks do not drop to the strike price or lower, then I pocket cash from the put option premium, and do it again. And again.

I have been making way more with my cash than the puny interest that CDs and bonds pay. Of course, there's risk, but one can manage it if he's not too greedy.

I also sell covered calls on the shares I hold. This is something else.
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Old 09-15-2021, 11:40 AM   #79
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Felt it wasn't a good idea to invest the savings in the last 1-2 years of work, only to draw it right back out again, so just chucked it in the bank. Ended up with a little over 2 years worth of cash at retirement and am now spending that down.

Will probably stop at 4-6 months worth and start to spend down bonds I put in taxable a few years ago. While standard advice would tell me not to hold bonds in taxable, I do get an advantage now. Between that and the cash, I have enough to cover expenses until eligible for Medicare, so don't have to worry about selling appreciated stock and accidentally crossing an ACA subsidy threshold to get money to live.
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Old 09-15-2021, 12:45 PM   #80
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Oops. I voted More than 5 because I mis-interpreted your question as "how much invested assets did you have..." Yeah, I know there's a difference.

Probably less than 1.0. DH was getting SS and the total invested assets were high enough that I didn't mind taking a lot of risk.
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