Poll:Got a lot of cash?

[Totoro]

This is what I also consider cash. Cash does not have to be MM or CD or bank deposits. If interest goes up, it does not go down, then it is cash. Stable value funds and I-bonds certainly qualify.

If it looks like a duck, swims like a duck, and quacks like a duck...

A fully qualified duck for me should also be able to fly away. If I can't access it within a few months, its not cash. I do have a category "non-volatile" which includes cash.

CDs that can be opened up with a small penalty is cash to me. My inaccessible tax-exempt savings account isn't cash.

 

[NW-Bound]

A fully qualified duck for me should also be able to fly away. If I can't access it within a few months, its not cash. I do have a category "non-volatile" which includes cash.

CDs that can be opened up with a small penalty is cash to me. My inaccessible tax-exempt savings account isn't cash.

I can access anything and get it within a few days with a few mouse clicks. However, I would not want to touch some accounts, even the I-Bonds, unless I do not mind paying mucho deferred taxes.

Your post brought up a point. I look at low-yield investment instruments as cash to differentiate them from bonds, which will drop in value when interest rate rises. Some people apparently think of cash literally as something that they are ready to spend in a moment's notice.

Unless one is just starting out and does not have much, most retirees have enough money stashed away that even 20% cash means an amount in the several hundred $K, and I do not see that as loose change to be spent shortly. Heck, that would mean a 20% annual WR, and his stash would not last long at that rate.

 

[Tom57]

Besides my house, 100% of my investments are in cash at Vanguard Prime Money Market.
Why? I can't spend all of what I have so there is no reward to take any market risk with bonds or equities.
Boring but satisfied.

 

[Car-Guy]

Other than market timers, who would ever hold anywhere near 50% in Cash?

Maybe those who feel they have won the game and have taken their chips off the table. (Which is the same comment that really started this poll from the "How much cash to hold" thread in the "Stock Picking and Market Strategy" forum)

I know a number of them, myself included, just not many on this forum.

 

[RobbieB]

Oh yeah, cash is cash!

Cash is not ibonds. What are ibonds anyway, an Apple product?

Cash is something you buy stuff with. If you can't buy stuff with what you have it ain't cash.

 

[NW-Bound]

Do you have to have it in hand for it to be called cash? Bundles of Benjamin?

I-bond is indeed not cash. It's superior to cash which loses to inflation. I-bond gives you some returns over and above inflation.

Just a couple of mouse clicks, and that I-bond is transferred to my checking account, ready to buy stuff. It's the same as transferring from MM, and a heck of a lot faster than redeeming CD.

 

[dixonge]

As little as possible

 

[Sue J]

Besides my house, 100% of my investments are in cash at Vanguard Prime Money Market.
Why? I can't spend all of what I have so there is no reward to take any market risk with bonds or equities.
Boring but satisfied.

I understand where you are coming from, why take any risk.

I also have a large percentage in cash, I like a large emergency fund and we have older cars that we expect to replace in the next few years.

So why Vanguard Prime Money Market instead of a savings account or a CD?

 

[Tom57]

I understand where you are coming from, why take any risk.

I also have a large percentage in cash, I like a large emergency fund and we have older cars that we expect to replace in the next few years.

So why Vanguard Prime Money Market instead of a savings account or a CD?

Hi Sue J,

I use the Vanguard Prime MM out of habit (I used to be a Flagship level, now Voyager Select), the convenience of having all my money in one place, reliable electronic bank transfers to my local bank checking account, RMD calculations and finally I may get so bored that I want to get back into the market in the future.

The interest rate may be higher elsewhere, at an increase in risk, but I don't want any risk now. Truly I can't spend all what I am supposed to spend now so earning more interest just makes the under-spending a larger number.

 

[YVRRocketSurgery]

It'd be impossible to gather the data but it might be interesting to see a scatter plot of cash as a percentage of total investments/net-worth on one axis, cash as a percentage of yearly spend on the other axis, and the dots being different sizes depending on if you are 0%, 25%, 50%, 75%, or 100% to FIRE.

 

[RobbieB]

Ten percent of us have a lot of cash.

 

[RetireAge50]

Yikes. Cash is certain to lose half its value over 25 years while stocks quadruple.

 

[Car-Guy]

Yikes. Cash is certain to lose half its value over 25 years while stocks quadruple.

Past performance is no guarantee of future results.... Especially with stocks.

 

[RetireAge50]

Past performance is no guarantee of future results.... Especially with stocks.

Agreed. But I still think cash is more risky than stocks long term.

I have 6% cash now as we will be withdrawing 5% or more per year until SS and pensions kick in.

 

[Car-Guy]

Yikes. Cash is certain to lose half its value over 25 years while stocks quadruple.

Agreed. But I still think cash is more risky than stocks long term.

Okay, I'll check back in 25 years (I wish) and see if a million is only worth about 1/2 million in buying power compared to today and if the stock market is over 76000.

 

[Earl E Retyre]

Yikes. Cash is certain to lose half its value over 25 years while stocks quadruple.

Okay, I'll check back in 25 years (I wish) and see if a million is only worth about 1/2 million in buying power compared to today and if the stock market is over 76000.

+1. No one can be "certain" as to what the future will hold. Inflation, stock market, or otherwise.

 

[Badger]

Hi Sue J,

I use the Vanguard Prime MM out of habit (I used to be a Flagship level, now Voyager Select), the convenience of having all my money in one place, reliable electronic bank transfers to my local bank checking account, RMD calculations and finally I may get so bored that I want to get back into the market in the future.

The interest rate may be higher elsewhere, at an increase in risk, but I don't want any risk now. Truly I can't spend all what I am supposed to spend now so earning more interest just makes the under-spending a larger number.

+1 Sounds familiar. I will soon be moving a few 100k tIRA mutual fund money to Vanguard MM to both have all my IRA investments with Vanguard to simplify RMD and to take advantage of the increases in that MF and have it available to reinvest in the future if interested. I am not concerned with inflation etc. since there is more than enough to last me until my expiration date is due and I would rather not have to make up a loss like the last time. As you age there is less time to make up.

Cheers!

 

[Another Reader]

I don't consider commercial paper money market funds all that safe. There's a reason the brokerage firms switched their settlement accounts to government money market finds.

I hold cash at Fidelity and Vanguard in the treasuries only MM accounts - FDLXX and VUSXX.

 

[audreyh1]

I don't consider commercial paper money market funds all that safe. There's a reason the brokerage firms switched their settlement accounts to government money market finds.

I hold cash at Fidelity and Vanguard in the treasuries only MM accounts - FDLXX and VUSXX.

Me neither. Most cash gets transferred to FDIC insured accounts. Otherwise govt MM.

 

[RobLJ]

I would be less concerned now--but was extremely worried about this in '06 (terrified, actually), so much that I switched allmost all cash in the 403b to Fidelity Intermediate Treasury--which turned out in retrospect to be one of the better change of allocations I've made. Shifting most of my large cap growth gains to small/mid value from 2000-2002 was the other, although part of that was rebalancing, part of that was changing the allocation to include more value, and part was terror at tech and S&P PEs.
The shift at both firms to government paper for MM is a good thing, even if it means no yield.
In early '06, we had some bonus money from DW that we were putting away for the yewts' college and the Schwab guy tried to get me to put it in their "yield plus" money market (I can't remember the fund name), which I refused and then read the prospectus to see all the bank paper in it, including several banks that went down in the Crash. In '08, it and its co-fund sank like a stone and Schwab was in litigation for many years, since they had sold it as a "safe" money market--Allegedly, to be sure, but based on my experience, I believe it. It turned out we didn't need it for the college--we paid as the yewts went, but it could have been devastating.
(Also, I think the switch to primarily govt paper was pretty much mandated in the post-crash Reforms/regulation--but maybe not.)
Cash is 12% of the investment portfolio, but more (16%) if you include savings. Too high, but I'm OK with that. I am putting a bit more in stocks/bonds incrementally when the market goes down 3%.

I don't consider commercial paper money market funds all that safe. There's a reason the brokerage firms switched their settlement accounts to government money market finds.

I hold cash at Fidelity and Vanguard in the treasuries only MM accounts - FDLXX and VUSXX.

 

[audreyh1]

I had moved away from money market funds years ago (once the temporary Govt guarantee expired) due to liquidity concerns and knowing the SEC would mandate changes eventually. But a major impetus was I could earn ~1% in an FDIC protected savings account, and yields had dropped well below 0.1% in the comparatively riskier MM funds. It only takes a day to transfer funds, so the convenience factor was minor.

Not so easy to manage in an IRA although some offer bank-sweep funds.

 

[Drake3287]

Full CalPERS retirement that I easily live off but I also have about $500,000. in investments and another $250,000. in cash. I fully realize I have way to much cash on hand.

 

[street]

No>>> We have about 18% in MM,CD and saving plans which make minimum return. My plan was to always have enough money that was liquid and that taxes were paid on to live on when I retired. This 18% of cash we will be able to live my life time on and the rest 82% is invested in stocks/bonds. My plan was to live of off investment returns and never have to touch principal.

 

[datuck]

We have 5% in cash, 24% in other taxable investments, 45% in IRAs and 26% in real estate investments. DW stills works (self employed as RE agent) and I consult a few hours per week just to use my brain and pay for golf related expenses [emoji16]. A bit concerned about where markets are heading overall but having made it through other ups/downs/ups, I can deal with it...

 

[cbo111]

We have almost 20% in cash (cds, ibonds, MM). While hard to quantify, but I got a bad feeling about turbulence in 2017. I had the same feeling prior to the 08 correction and housing market crash. Back then, I watched my net worth drop by 30%. This time I will keep some powder dry for when the correction happens. Market timing....maybe



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