Cash and Near Cash...composite

[YellowSubmarine]

I am adjusting my allocations and I am determining what constitutes "near cash". After long consideration, I decided the following items will make up my Cash/near cash allocation. Feedback and comments are welcomed. What do you consider cash and near cash for your asset allocation? Here's mine; and when I include this group, my cash/near cash allocation rises to 24% of my investment designated fund potentials or emergency funding: (note I do not include dividends payable in 2026; if I did it would raise my "cash" allocation another 3.5%; further, they are in DRIP mode currently)
Bank accounts (checking, savings)
Bond interest payable in 2026
Bond maturities in 2026
Money Market accounts
Special funds held for future equity/bond purchases including: NEA, NMVO, NZF, JBBB (historically these funds trade in a narrow range)

 

[jazz4cash]

Near cash for me can be anything that matures within 2yrs. No particular reason for choosing 2 yrs.

 

[pb4uski]

Cash/near cash is typically at a point in time and would include currency, checking and savings accounts, money market accounts, etc.

Bond interest payable in 2026 can't be converted to cash without selling the bond so I would not include that. Same with 2026 maturities. Don't know about the others.

Now that said, I do store some dry powder in IBHF, an iBond High Yield Target Maturity 2026 but I don't consider that cash.

But at the end of the day you can include whatever you want.

 

[Koolau]

Cash/near cash is typically at a point in time and would include currency, checking and savings accounts, money market accounts, etc.

Bond interest payable in 2026 can't be converted to cash without selling the bond so I would not include that.

I include my MYGA's and my GIF in the 401(k).

 

[audreyh1]

Near cash for me can be anything that matures within 2yrs. No particular reason for choosing 2 yrs.

Yeah same for me but 18 months.

 

[YellowSubmarine]

Cash/near cash is typically at a point in time and would include currency, checking and savings accounts, money market accounts, etc.

Bond interest payable in 2026 can't be converted to cash without selling the bond so I would not include that. Same with 2026 maturities. Don't know about the others.

Now that said, I do store some dry powder in IBHF, an iBond High Yield Target Maturity 2026 but I don't consider that cash.

But at the end of the day you can include whatever you want.

fwiw... I have 17 bond issues that mature in 2026 with the average Third Party Pricing of 99.02; and far as the coupon, none of the bond are junk rated or in default. I feel quite confident that if I sold the 2026 bond prior to maturity, I will receive interest accrued and near par value. I know it's not a perfect measure ; and that's why I exclude dividend from this allocation/metric.

 

[Jerry1]

In my allocation, I only think in terms of equities and all other. So for me, my allocation is 40/60. 40% equities and 60% everything else. I do, however, keep a good amount of cash, which to me is cash in a credit union and my money market at Fidelity. To me, that’s a portion of the 60%.

 

[Original Wally]

In my allocation, I only think in terms of equities and all other. So for me, my allocation is 40/60. 40% equities and 60% everything else. I do, however, keep a good amount of cash, which to me is cash in a credit union and my money market at Fidelity. To me, that’s a portion of the 60%.

Ditto. Equities and everything else. 30 Eq / 70 cash and bonds.

I think that IF IF IF IF I needed a boatload of $$, the bonds would be fairly liquid. The equities in the taxable account have a HUGE unrealized gain attached.

 

[Spock]

IMO, If I have to sell it first, it's not cash. One possible exception in normal times would be USTs. I keep enough in cash that if I'm scrambling for more cash than I have in checking/MM accts, then there is a possibility others will be scrambling too.

 

[Koolau]

Ditto. Equities and everything else. 30 Eq / 70 cash and bonds.

I think that IF IF IF IF I needed a boatload of $$, the bonds would be fairly liquid. The equities in the taxable account have a HUGE unrealized gain attached.

REALITY CHECK, PLEASE!

Your response just made me wonder: Equities held either in taxable or tIRAs/401(k) or similar have this issue of HUGE unrealized gains attached. You won't even know how "bad" an issue that might be until you cash out. Even then, there may be LIFO vs FIFO issues or other issues that mean you don't know how much tax you will owe.

BUT what about Roth IRAs? Even though most of my Roths have equities in them, and they certainly have lots of gains (right now) if I took proceeds from them, there are no tax consequences and I end up with either a check or an electronic transfer to my checking account. In "essence" they are "like" cash to me.

I discovered this, sort of accidentally recently. I had a very small bond fund that was superfluous in my AA. It was a Roth account. I cashed it out and directed the funds to my checking account. For all intents and purposes, that Roth I decided to get rid of was (wait for it) a "cash" account - even though it was a bond fund - and it COULD have been an equity fund. In every respect OTHER than that the account balance varied daily, to ME it was just like a cash account.

This is all a revelation to me. Am I thinking wrong?

 

[YellowSubmarine]

IMO, If I have to sell it first, it's not cash. One possible exception in normal times would be USTs. I keep enough in cash that if I'm scrambling for more cash than I have in checking/MM accts, then there is a possibility others will be scrambling too.

I used to feel that way; but after considering I have six months of catch-all expense potentials in a bank on call - I switched my thinking. I believe securities that I own can be monetized within six months. If not, we are in some knee-deep issues; and only real assets may have some value, e.g. real estate, collectables, gold, etc.

 

[Dash man]

Cash, banks and CUs, money market, Credit Union CDs with 6 months or less, treasuries, bonds that are easily sold. Basically anything I can get my hands on quickly without paying too much to liquidate.

 

[Koolau]

IMO, If I have to sell it first, it's not cash. One possible exception in normal times would be USTs. I keep enough in cash that if I'm scrambling for more cash than I have in checking/MM accts, then there is a possibility others will be scrambling too.

Sorry. What's a UST? Couldn't find it in the acronym list.

 

[Dash man]

REALITY CHECK, PLEASE!

Your response just made me wonder: Equities held either in taxable or tIRAs/401(k) or similar have this issue of HUGE unrealized gains attached. You won't even know how "bad" an issue that might be until you cash out. Even then, there may be LIFO vs FIFO issues or other issues that mean you don't know how much tax you will owe.

BUT what about Roth IRAs? Even though most of my Roths have equities in them, and they certainly have lots of gains (right now) if I took proceeds from them, there are no tax consequences and I end up with either a check or an electronic transfer to my checking account. In "essence" they are "like" cash to me.

I discovered this, sort of accidentally recently. I had a very small bond fund that was superfluous in my AA. It was a Roth account. I cashed it out and directed the funds to my checking account. For all intents and purposes, that Roth I decided to get rid of was (wait for it) a "cash" account - even though it was a bond fund - and it COULD have been an equity fund. In every respect OTHER than that the account balance varied daily, to ME it was just like a cash account.

This is all a revelation to me. Am I thinking wrong?

I understand your reasoning with a Roth being tax free, but if there were a large market drop, I’d be hesitant to sell to get cash out. I’d rather keep it in to hopefully recover.

 

[Dash man]

Sorry. What's a UST? Couldn't find it in the acronym list.

United States Treasuries

 

[Koolau]

Sweep accounts?

 

[Koolau]

United States Treasuries

Doh!

Thanks!

 

[jollystomper]

I keep it simple. Local and online bank checking/savings accounts, and any investment account where the par value is $1 and never changes, and whose withdrawal does not cause a tax event - i.e.,taxable or Roth account money market funds (though we do not hold cash in our Roths). - are cash. Our T-Bills are Bonds, until the 5 year holding period is met and they can be sold without loss of interest. I considers CDs, when we have them, to be bonds, as again if I sell them before they mature there is a loss of expected interest.

I do not have a need for a "near cash" category, as I keep enough in cash so that I do not need to sell stocks/bonds/CDs/other things to support our withdrawal rate, or for an "emergency". I understand there are different definitions of "emergency cash needs" (which in itself might be a good topic of discussion), but so far in our FI life nothing has come up that has required us to turn other assets into cash to cover.

 

[Dash man]

Sweep accounts?

My Roth accounts are fully invested. Dividends are either reinvested or used to purchase another equity.
Of course if cash built up in a sweep account it would be usable immediately.

 

[Koolau]

My Roth accounts are fully invested. Dividends are either reinvested or used to purchase another equity.
Of course if cash built up in a sweep account it would be usable immediately.

Yeah, I have intentionally directed my Megacorp dividends into a sweep account (I guess that's what it's called) to avoid the "DRIP" effect which makes keeping basis problematic (to me).

I have used that account as a cash account on occasion.

 

[Dtail]

Money market accounts for me.

 

[Koolau]

I understand your reasoning with a Roth being tax free, but if there were a large market drop, I’d be hesitant to sell to get cash out. I’d rather keep it in to hopefully recover.

Agree. The "issues" of taking from variable accounts may be problematic.

So NOT considering such a transaction as a cash transfer is reasonable.

 

[YellowSubmarine]

I am surprised no one mentions annuity payments or SS. I consider my SS near cash, specialized annuity. But, I didn't include it in the thread.

 

[stoic1]

I would consider BOXX as near cash.

 

[OldShooter]

Why is this important? Whatever you want to consider to be cash, consider it to be cash. I will do the same and if my decision is different than yours, so what?