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How much post tax cash do you keep around?
12-01-2020, 12:00 PM
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#1
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Thinks s/he gets paid by the post
Join Date: Mar 2013
Posts: 1,016
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How much post tax cash do you keep around?
I'm retired, DW is working 2 more years, we are not touching anything in our portfolio and (barely) living off her salary. We have been very cash strapped having bought a second home last summer, but are now selling a third property we have had since 1994 in a few weeks. Once all the fees, taxes are paid and the proceeds are divvy'ed to pay for a few other things next year, we'll still have a nice chunk of cash to deposit. Today, looks like it would be about 4.4% of the portfolio.
We have muni and bond heavy accounts in parts of the portfolio, but since DW is still working, we'd get hit at least 22% fed tax if we took any of it, so having a post tax cash bucket (again, finally) feels god for ITSHTF.
Curious what percent other have in post tax cash accounts in their portfolio?
Also, part of me wants to invest this cash in SOMETHING, but looking at CD rates and bank saving rates, why bother?
__________________
Well of course it is my opinion, why would I express someone else's??
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12-01-2020, 12:20 PM
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#2
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2016
Posts: 8,968
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I agree. I like to have a nice fat stack of cash to use for expenses so I don't have to sell at bad times. Sits in the checking account and earns a tenth percent.
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12-01-2020, 12:22 PM
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#3
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Moderator
Join Date: Nov 2015
Posts: 13,879
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12-01-2020, 12:27 PM
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#4
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Thinks s/he gets paid by the post
Join Date: Mar 2013
Posts: 1,016
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Quote:
Originally Posted by Aerides
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I had read that thread, or most of it, and perhaps my situation is a little different in that with DW still working and that most of the cash and cash-like investments in the portfolio come with a bad tax sting, and I really don't want to touch it (now) unless I have to.
I was more asking how much post-tax cash do folks have as a percentage of their overall portfolio.
__________________
Well of course it is my opinion, why would I express someone else's??
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12-01-2020, 12:31 PM
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#5
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Recycles dryer sheets
Join Date: Jan 2017
Location: Bay Area
Posts: 248
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Checking, MMA, ST Fixed Income in Brokerage Core account total ~5%.
And I have a low WR (due to pension income covering my routine living expenses).
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12-01-2020, 12:32 PM
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#6
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,266
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We're currently at about 2%.... about 1.5% or the 2.0% in an online savings account earning 0.6% and the rest earning ~1.5% in Toyota IncomeDriver Notes and Dominion Energy Reliability Investment Notes accounts.
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If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
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12-01-2020, 12:44 PM
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#7
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Thinks s/he gets paid by the post
Join Date: Feb 2007
Posts: 2,605
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Quote:
Originally Posted by doneat54
I
I was more asking how much post-tax cash do folks have as a percentage of their overall portfolio.
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This can get a little convoluted. I keep 3 years of expenses in Cash (banks, MMF, High Yield Savings, Roth MMF). That amounts to about 3% of my portfolio - your per centage will vary based on your costs of living. For purposes of cash flow the majority of my amount (about 2 years worth) are in accounts that pay taxable interest. The remainder is what is generated in my Roth by dividend payments.
All things considered. If you want to avoid taxable events, I'd flip the allocation around so the majority (2 years expenses) sits in a short-term bond fund or Money Market Fund in a Roth, and your quick/available funds is in taxable accounts (bank/credit union, etc.)
Rita
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Only got A dimple, would have preferred 2!
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How post tax cash do you keep around?
12-01-2020, 01:12 PM
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#8
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Thinks s/he gets paid by the post
Join Date: Sep 2002
Posts: 1,173
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How post tax cash do you keep around?
Dave Ramsey had a caller yesterday who’s ailing father (87) had $500k in one hundred dollar bills. You can do a you tube search and find the clip. The man likes to stack cash.
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12-01-2020, 01:15 PM
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#9
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,266
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Did they provide the ol'man's address?
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
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12-01-2020, 01:32 PM
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#10
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Thinks s/he gets paid by the post
Join Date: Mar 2013
Posts: 1,016
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__________________
Well of course it is my opinion, why would I express someone else's??
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12-01-2020, 01:55 PM
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#11
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Thinks s/he gets paid by the post
Join Date: Sep 2002
Posts: 1,173
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Quote:
Originally Posted by pb4uski
Did they provide the ol'man's address?
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Lol Dave talked about protecting him and hopes he at least has a safe.
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12-01-2020, 02:11 PM
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#12
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Thinks s/he gets paid by the post
Join Date: Oct 2017
Posts: 1,137
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Enough liquid funds so we wouldn't have to sell equities for at least 3 years. I don't worry about what % this may be.
I should also add that I keep enough cash in our HSA to cover 3 years of out of pocket max. The remainder of HSA is in S&P500 index.
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12-01-2020, 02:18 PM
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#13
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2008
Location: On a hill in the Pine Barrens
Posts: 9,686
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Quote:
Originally Posted by doneat54
I had read that thread, or most of it, and perhaps my situation is a little different in that with DW still working and that most of the cash and cash-like investments in the portfolio come with a bad tax sting, and I really don't want to touch it (now) unless I have to.
I was more asking how much post-tax cash do folks have as a percentage of their overall portfolio.
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I think most call that "cash". I see your point that some cash is in 401(k) index funds, etc. But I've not heard anyone make that distinction. When I report 5% cash target, that is money market, hi-interest account, CD's, checking and savings.
DW can continue to grow in her job and pay the bills! At least that is my motto.
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12-01-2020, 02:23 PM
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#14
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2006
Location: Boise
Posts: 7,866
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0.09%
(51, single, one house, retired, spare cash is at Alliant Credit Union earning 0.55% APY last I looked. About to refill cash from taxable but waiting to see how December cash flow turns out - would like to defer capital gains to 2021 if possible, but it seems unlikely.)
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"At times the world can seem an unfriendly and sinister place, but believe us when we say there is much more good in it than bad. All you have to do is look hard enough, and what might seem to be a series of unfortunate events, may in fact be the first steps of a journey." Violet Baudelaire.
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12-01-2020, 03:33 PM
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#15
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Recycles dryer sheets
Join Date: Jan 2014
Posts: 406
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Currently we have about 5% in MMA's earning less than 1% and I'm OK with that. If the SHTF then we've got a couple of years of cash to live on before we have to start selling stock or bond funds.
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12-01-2020, 03:35 PM
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#16
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2013
Location: Texas
Posts: 10,864
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Honestly, too much....
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20's "something" mind, trapped in a 70's "something" body
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12-01-2020, 03:59 PM
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#17
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2007
Posts: 13,202
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I'm at about 8% right now. A lot of it is in a CD ladder to supplement dividends for living expenses, and not take a whole lot of income for subsidy purposes. That amount will get lower each year until I hit 65, and I'll have to decide how much I want in cash then. Often I think I have too much in cash, but I figure it's safe and non-volatile and I can take a little more risk with the rest of my portfolio.
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12-01-2020, 05:21 PM
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#18
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Full time employment: Posting here.
Join Date: Apr 2006
Posts: 880
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We have about 10% of portfolio in laddered CDs, MM and savings. Sometimes I think it is too much, but let’s us sleep soundly at night. It could cover around 8 years of expenses.
__________________
"Tell me, what is it you plan to do with your one wild and precious life?" - Mary Oliver
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12-01-2020, 05:40 PM
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#19
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Thinks s/he gets paid by the post
Join Date: Sep 2011
Location: Placerville
Posts: 1,788
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Post tax, I have $90K in my checking account and $5K in cash at home hidden away. Pre-tax I have $90K in a guaranteed savings fund. Percentage wise, $90K is 10% of my entire portfolio. I have a pension and SS that is more than enough so I haven't had need to touch either the pre or post tax cash assets. Or any of the IRA money for that matter. Things are likely to get ugly when I reach RMD age and have to pull some out. Maybe I won't need it, but that doesn't mean I'm going to be all happy handing over a chunk tot he government in taxes.
I don't set the limit based on %, but by the dollar amount. I can't think of any scenario that I'd need more than those amounts, so that is why they are what they are.
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12-01-2020, 05:42 PM
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#20
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Thinks s/he gets paid by the post
Join Date: Dec 2018
Location: DuPage County IL
Posts: 2,702
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as in liquid-available-right-now? probably more than we should. rough math is about 12% in various interest bearing accounts.
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Rich
Ham Radio, Sport Pilot, RVer
FIRE: 8/11/2005, age 55y,1d
Dispatcher, then shift supv, then administrator for a regional 9-1-1 call center
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