5 years in cash

[haha]

I probably have about 15 years worth of cash in various currencies, getting a variety of yields. I move them around, generally based on the various Central Banks' interest policy directions. Works for me.

This sounds like an interesting alternate path. What are the mechanics of doing this? Do you use Everbank or have accounts in the various countries whose currencies you hold?

Ha

 

[jIMOh]

I consider cash and bonds to be very different and used for different reasons.

I am also still accumulating, so most of this is based on my plan, not current reality.

5 years expenses in cash or TIPS. The biggest risk here is needing money NOW and inflation.
Another 5 years expenses in bonds. Because of interest rate risks and trends, this value may fluctuate.

10 years expenses will always be in cash or bonds. I could see adding to cash and lowering bonds to 4-3-2 years expenses if bonds are going up in value (interest rates trending downward).

 

[Fastfade]

I have 11 consecutive years in fixed( fixed annuities). The good news is that I missed both the DotCom mess and this latest mess. The bad news is I only made one birdie today

 

[Medit8]

This sounds like an interesting alternate path. What are the mechanics of doing this? Do you use Everbank or have accounts in the various countries whose currencies you hold?

Ha

Ha,

I have accounts offshore (chose your definition). For US citizens, that is probably more difficult, however the concept remains the same. I am not familiar with Everbank, but if they grant you access to a variety of currencies, you should be able to replicate the model.

If you have ice in you veins (literally), Iceland just raised interest rates by 6% to 18%. That's one heck of a CD if it pays back.

 

[W2R]

I've heard a lot of folks on this board talking about having 5 years in cash, but I have yet to hear anyone talk about having 5 years in bonds. Which surprises me since most experts on asset allocation advise putting the bulk of your non-equity holdings in bonds, not cash.

So all you folks who said you have 5 years in cash, do you really mean cash (e.g. CDs, saving account, money market) or do you mean bonds (duration longer than a few months)?

I really mean cash.

Musing about this - - a person could have five years' in cash, and still have the bulk of their non-equity holdings in bonds, if they have a conservative enough AA.

 

[kumquat]

I really mean cash.

Like paper? in the matress?

 

[redduck]

this might be a good time to get into VWEHX: Summary for VANGUARD HIGH YIELD CORPORATE F - Yahoo! Finance

I am sure Dex is absolutely right on this one, as I sold 1/2 of my VWEHX last week.

 

[W2R]

Like paper? in the matress?

Like Vanguard Money Market funds, right now, plus a little in the bank. Like CD's, at some point in the near future, tentatively.

As far as paper type cash (looking in my wallet), nope.

 

[NW-Bound]

Like paper? in the matress?

It so happens I read about the following info in BusinessWeek, 11/3/08.

Sales of home safes were up significantly last month, as reported by SentrySafe, a safe maker, and by Home Depot. Apparently, people have been hoarding cash. This is further collaborated by the Federal Reserve reporting a rise of $21B of cash in circulation.

Has anyone read reports of increased gun sales, and lead?

As far as paper type cash (looking in my wallet), nope.

Same as you, I have little cash in my wallet. Are we too trusting in the financial system?

I thought I read about a poster here withdrawing extra cash to pad his wallet just in case, maybe a month ago.

 

[bbbamI]

MM and cd's. $15 in my billfold and $8.26 of change in a jar....

 

[boont]

Cash Cow

I was up at the ranch this week and there was an article in the local paper there about a 90 something year old man who took his $100,000 plus stash out of the bank and bought a home safe. Depression era man.

Well, the overall property got raided by the dope police. Caught the young ones and confiscated his cash. Paper said the D.A. refuses to look at his bank withdrawal receipt to prove where it came from. I hope they can settle that, seems a shame.

I used to keep quite a bit of cash in the house. I had a stack of hundred dollar bills. Every time I would sell an old car or boat or something I would get more hundreds from the buyers.

It finally became too much. I was way over the $10,000 limit at which banks report your deposit to the IRS looking for criminals. So, I went to several banks and deposited it. I remember a young teller gave out an, "Oh, God" or something when I plunked down a bundle.

Not safe to have too much laying around. My neighbor told my wife "I run a deep keel". Has some gold in his back yard. Too deep a keel for me.

boont

 

[Texarkandy]

....

It finally became too much. I was way over the $10,000 limit at which banks report your deposit to the IRS looking for criminals. So, I went to several banks and deposited it. I remember a young teller gave out an, "Oh, God" or something when I plunked down a bundle.
.....

Actually the filing of a CTR for 10k plus deposits isn't what attracts the notice of the Feds. Banks file thousands of CTR's a day nationwide as a routine. No big deal.

It's when someone has obviously structured deposits to avoid the filing of a CTR that attracts attention. Structuring deposits to avoid the requirement to fill out a CTR is a felony and easy to prosecute regardless of whether the source of the funds was legitimate or illegitimate.

 

[boont]

Uncle Scrooge

"Actually the filing of a CTR for 10k plus deposits isn't what attracts the notice" Texarkandy

Well, I'm glad to hear that. I assumed that if a person came in with a huge pile of grungy looking stacks of one hundred dollar bills, that person would be likely mistaken for a drug dealer.

I do know that many people in shady businesses have to pay to launder money.

Years ago, I lived in the marina section of San Francisco. Very expensive, even then. I often wondered how my neighbors afforded to live there. Then one day the newspaper had an article about a raid on a nearby house. Among other things they found piles of cash and a bill counting machine.

Every after, I always wanted to have enough cash laying around to need a bill counting machine. Well, as the market sinks, I'm getting there. Even at, soon to be, zero interest rates.

My old boss, now worth about four billion dollars (I think it's more since he has no debt) has an original cartoon painting of Scrooge McDuck over his fireplace, money bags and all. Lucky man.


b.

 

[OAG]

Interesting short pdf on money laundering flags (OCC Treasury): http://www.occ.treas.gov/bsa/documents/red_flags/Deposit_Acct.pdf

 

[Texarkandy]

"Actually the filing of a CTR for 10k plus deposits isn't what attracts the notice" Texarkandy

Well, I'm glad to hear that. I assumed that if a person came in with a huge pile of grungy looking stacks of one hundred dollar bills, that person would be likely mistaken for a drug dealer.

I do know that many people in shady businesses have to pay to launder money.

Years ago, I lived in the marina section of San Francisco. Very expensive, even then. I often wondered how my neighbors afforded to live there. Then one day the newspaper had an article about a raid on a nearby house. Among other things they found piles of cash and a bill counting machine.

Every after, I always wanted to have enough cash laying around to need a bill counting machine. Well, as the market sinks, I'm getting there. Even at, soon to be, zero interest rates.

My old boss, now worth about four billion dollars (I think it's more since he has no debt) has an original cartoon painting of Scrooge McDuck over his fireplace, money bags and all. Lucky man.


b.

Large sums of money (in the hundreds of thou or more) derived from illegal activity are traditionally laundered via business accounts to make them appear to be legitimate sources of income & CTR's are filed. You don't care if a CTR is filed when you are trying to make the $ look like they are from a legit source. No respectable money launderer would attempt to avoid CTR requirements.
(& if anyone ever suggests it to you, I suggest you shop around & find yourself a better money launderer )

It's generally smaller sums that are "smurfed" into deposits of less than 10k to avoid the CTR requirement.

A customer as you described with "grungy looking stacks of hundred dollar bills" would likely have an SAR filed by the bank with FINCEN. That's what would alert the feds - not the CTR. Banks are generally alert to & file SAR's on "smurfers" too. (the bank won't tell you if they've filed an SAR on you)

While still practiced, a lot of that stuff is more & more becoming "old hat" & things have become more sophisticated among the big players in the profession. (internet, money cards, eft, etc)

But what the heck do I know .....

 

[In-control]

I have 5 years in laddered CD's @ between 5-5.5% yield. I split the remainder 50/50 between VG Bond Index and High Yield for my bond portion. The rest are VG stock funds. One consideration with a bond fund is that the priciple can go down, my two bond funds are down. The 5 years of cash in CD's that are FDIC insured is really my operating $. The $ I yield from my non cd investments build my laddered CD's.

Also - I like to sleep at night and the 5 year CD ladder really smooths out the market variations!

 

[tuixiu]

You guys and gals with CD ladders did you start 'em by buying CDs of 1,2,3,...n years and say presto I've got a CD ladder or did you build 'em over many years with all longer maturity instruments until enough rungs?

 

[FIRE'd@51]

I have 11 consecutive years in fixed( fixed annuities). The good news is that I missed both the DotCom mess and this latest mess. The bad news is I only made one birdie today

Maybe you'd make more birdies if you changed your username to Slowdraw

 

[dex]

I am sure Dex is absolutely right on this one, as I sold 1/2 of my VWEHX last week.

I'm buying more of it - I don't have much investment cash remaining.

My plan is to use the dividends to buy mutual funds that don't pay monthly dividends e.g. small cap value stocks. It isn't much money but it should help my portfolio recover faster.

 

[dex]

This sounds like an interesting alternate path. What are the mechanics of doing this? Do you use Everbank or have accounts in the various countries whose currencies you hold?

Ha

Look at fxa, fxe, fxc etfs
Good charts
Forex Street. The Foreign Exchange Market
News
RatesFX - Daily foreign exchange rates, information about currencies and currency markets

Do your research.
I've noticed that the prime mover in FX is the anticipation of the direction in interest rates and the relative values.
Also, some currencies influenced by commodities in addition to interest rates - AUD, CAD
I'm looking at the area around the 2001 lows as buying points.
What's good about them is that you are earning interest on the investment.
Don't trade in and out of them. Try to find the long term trend.

My purchase idea is:
1st
AUD
CAD
commodities turn around and catch Asian economy turn around
Euro - interest rate
UK pound - interest rate - this will need to come down a lot before I buy it.

 

[Ronnieboy]

I am guessing multiple banks/credit unions are used to stay under the $100k limit on accounts? If you consider $50k as 1 year expenses and you have 5+ years worth of 'cash' in CD's that is $250k+ that has to be split between 3 financial institutions?

 

[Gotadimple]

I am guessing multiple banks/credit unions are used to stay under the $100k limit on accounts? If you consider $50k as 1 year expenses and you have 5+ years worth of 'cash' in CD's that is $250k+ that has to be split between 3 financial institutions?

I be tempted to split between 5 institutions so I stay below the 100K limit (two CD's plus interest at one bank will exceed the limit).

-- Rita

 

[OAG]

I am guessing multiple banks/credit unions are used to stay under the $100k limit on accounts? If you consider $50k as 1 year expenses and you have 5+ years worth of 'cash' in CD's that is $250k+ that has to be split between 3 financial institutions?

Not true. 100K in DW, 100K in Self, 100K DW POD to 3 kids, 100K Self POD to 3 kids and IRA DW about 100K, IRA Self about 150K total 650K single institution ALL FDIC. Pull interest monthly and either spend it or on-line transfer it to another institution.

 

[Khan]

You guys and gals with CD ladders did you start 'em by buying CDs of 1,2,3,...n years and say presto I've got a CD ladder or did you build 'em over many years with all longer maturity instruments until enough rungs?

I built mine up over the years.

Originally was aiming for a 'maturity date' of 2008 (planned to retire in March 2008 with 30 years service). Plan was for ~$5000/year from each of five $20,000 CDs.

I retired rather suddenly in December 2004. This December's CD is $10,000 (plus 5 years of interest of 3.75%). I don't have the cash to boost it to $20,000.

Did have ~$20,000 in MMA, but depleted that in 2007 with buying a car and boosting 2012 CD to $20,000.

 

[rickier55]

OT question- how did your equities only go down 8% with the markets of 2008? I would have expected equities to drop more than this. Asking to learn. thx.

Yeah, those look strange. The answer is that my total portfolio (cash + bonds + stock) has decreased. BY a LOT. While the percentage of equites in my total only dropped by 7%, The value of my equities dropped around 44% year to date.

And I don't think anyone has ever learned anything from me about finances - it's not a subject in which I consider myself knowledgeble.

Rick