Cash as part of AA

[Al in Ohio]

As others have said, to me there are equities and then everything else. I’m at 60/40, no third number. Cash is definitely included in the 40. In that 40, there is some real cash but mostly, there is about two years worth of living expenses in pretty liquid investments - 3 month CD’s.

I look at the percentages as risk/very limited risk. Currently @ almost 59 yrs old and three years into retirement, I’m comfortable having 60% subject to the riskier investments.

Fyi. CD’s are considered cash by accountants and FA’s. They are bank accounts and will never lose their initial principle hence they meet the definition of cash.

 

[jazz4cash]

2yrs of living expenses in 3 mo CDs sounds painful.

 

[OldShooter]

I have browsed this thread several times and continue to be amazed by the number of people who consider this to be an important question. The OP was just asking for opinions, not attempting to set up a cage match.

... they meet the definition of cash.

I am also a little puzzled by statements like this. Is there a stone tablet somewhere that I have missed?

I think the appropriate attitude towards this kind of question was exhibited in Through the Looking Glass: "When I use a word," Humpty Dumpty said, in rather a scornful tone, "it means just what I choose it to mean—neither more nor less." I know what I consider to be cash and really don't care what criteria others may use for identifying their "cash." We are all right.

 

[audreyh1]

2yrs of living expenses in 3 mo CDs sounds painful.

Really doesn’t matter if you have more than enough.

 

[jazz4cash]

Really doesn’t matter if you have more than enough.

That’s very true but a lot of folks are not that fortunate. I’m helping a family member now....Plus the difference between nothing and practically nothing is minor but it’s still painful for me to contemplate my deposits being disrespected.

 

[Green Papaya]

I include cash in my AA, counting everything in checking/savings/MM accounts as cash.

However, I do have a Mass Mutual life insurance policy with a fair amount of cash value. I do not know how to count that.

 

[pb4uski]

... However, I do have a Mass Mutual life insurance policy with a fair amount of cash value. I do not know how to count that.

FWIW, I include my CSV in fixed income... mine paid about 3% last year (2019-2020).. that is:

"interest" = increase in CSV for the year less premiums
average balance = beginning of year balance + 50% of premiums

and that is conservative in that it attributes zero value to mortality coverage since I consider it to be fixed income in my AA.

 

[GenXguy]

I've always included cash and cash equivalents in my AA.

 

[RunningBum]

That’s very true but a lot of folks are not that fortunate. I’m helping a family member now....Plus the difference between nothing and practically nothing is minor but it’s still painful for me to contemplate my deposits being disrespected.

Interest rates were better last fall...when the post you commented on was made. But you weren't the one who bumped an old thread.

 

[jimbee]

I've always included cash and cash equivalents in my AA.

I include them too. If I don't, my numbers are incomplete.

 

[calmloki]

Due to a series of unfortunate events we are at 31% in cash right now. Sure hope I can include it in my AA, 'cause I don't think I could take the emotional hit from not including it.

 

[Koolau]

I count everything except primary residence in my "invested" assets. Not sure how to define "cash." Obviously, checking account and any bank savings/CDs etc. I have a significant investment in a GIF (guaranteed income fund) which acts like bonds or cash, depending. Oh, the "fistful" of dollars I keep on hand, I do not count either as cash or investment. It's an insurance policy (we DID have an 18 hour Island wide electrical outage a few years back. Cash was king but YMMV.)

 

[Dtail]

Some of us don't count certain cash as part of our investment portfolio. Just semantics to some.