What % of income do you keep cash on hand, what would you recommend?

[Greg 59]

Right now it would be advisable you have 100% in cash. Anything less would be money down the drain. In fact I'm concerned about the viability of the banks.

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[derklink]

Usually 6 months in cash calculated generously to cover all expenses plus room for unforeseen stuff. Coincidentally moved some things around right before C-19 so now enough cash for 12 to 18 months if necessary.

[Chester01]

The better question, is how much money does one need to have to cease the fear. You have an existential question. There is great advice here on the specific amounts to have. But to address the dread, stay in the moment. The past is ghosts, and the future has not happened, there is only one moment and that moment is now. Enjoy your family, live with purpose, and find gratitude in each day. There you will find the answers to the questions you are looking for.

[jameholz01]

Originally Posted by Jona

I think the answer is highly age dependent as well as highly Selassie. At age 70 I get SS and I keep about $100k in available cash. I have very little market exposure as my nest egg is in an annuity which will pay out a fixed $ regardless of the market value, which admittedly has fallen a lot. Since the withdrawal is limited to 5%/year w/o penalty I need to keep some cash for big ticket items, furnass, roof, etc. Every case is different.

I would seriously suggest consulting a qualified financial advisor before moving money around.

I totally agree with you.


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[Chester01]

Originally Posted by Greg 59

Right now it would be advisable you have 100% in cash. Anything less would be money down the drain. In fact I'm concerned about the viability of the banks.

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In times like these, I would look to history. Countries have traversed epidemics before, and the wheels of progress continue to move on. Here in the US, these (Typhus, Flu, Smallpox, yellow fever, etc) were an almost yearly occurrence in the late 1700's and early 1800's with death rates massively higher than COVID-19. At one point almost 1/4-1/3 of the entire city of Philadelphia (the capital of the US in the late 1700's) would leave to rural areas and then return in a few months. It would interrupt congress and senate proceedings here, but then things would resume. Indeed the United States was founded in the backdrop of these uncertain times and so were many other nations. In every major marker crash, if you invested on the day before the crash, and stayed invested you would have earned back all of your losses and also profit as well.

While the economies of our nations were vastly different then, they did have ups and downs as a result of these events, the only difference being there were no real social safety nets. Because we have been living in a delusion for the past 30 years or so preparing for the wrong war, we all got blindsided and much of the markets are psychology. We have been through worse, Smallpox, 1918 flu, TB, polio, etc. Countries endured these events and the wheels of progress went on. The reality is this will pass and demand will improve, and with any luck be more prepared for these things in the future. How do I know? because it always has.

[Watchflair]

Originally Posted by Bingofrank

He is saying the opposite.

My income fluctuates year to year, and I tend to pay myself only once a year, but my living expenses are a fixed monthly amount, which is obivously less than my minimum income would ever be.

For a rainy day fund I need to save X months of day to day expenses, not x amount of income.

Correct.

[dkg1616]

About tree fidy

[AP8ESQ]

Originally Posted by dkg1616

About tree fidy

But what happens if the loch ness monster shows up?

[srvrf]

I agree that it is age dependent and as someone in my 50s, my wife and I maximized our 401k and 529s for the kids first. Then excess money went into an emergency fund and then a brokerage account. Once a year we get large bonuses relative to our salaries and we make sure we have at least 1 year of unmodifiable expenses (daily expenses) under normal circumstances. Now we have tried to cut back a little during COVID-19, but the bottom line is that I do value the security of having this available since our incomes will take a hit this year.


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[macuser553]

I would think about your monthly inflow and outflow. Does your income vary? Do you receive rental payments from people? Have enough cash on hand to be able to get through three to six months without shuffling much if all of a sudden everyone stops paying you. You can put it in a high-interest savings account. Beyond that, it makes sense to invest the money.

[Greg 59]

I'm not entirely sure what the percentage is but I always keep approx $1million in ready cash to act as a buffer against any unforeseen issues

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[pickettt]

Originally Posted by Greg 59

I'm not entirely sure what the percentage is but I always keep approx $1million in ready cash to act as a buffer against any unforeseen issues

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Your family members get held for ransom on the regular?

[EEpro]

12 months expenses as cash and a $1.5M life policy since I'm the only earner.

[Pongster]

I agree with most of the posts. What amount to be kept in cash is a function of estimated expenses (3 months to a year, perhaps). Or a function of your total assets (not income). Say 5 to 10%? Then the rest divided between hard (real estate, etc) and soft (stocks, bonds, etc) investments as well as the occasional luxury pieces (watches, jewelry, etc).

What is relevant to your income would be percentage you plan to allocate for savings, for daily expenses and for extraordinary/leisure expenses.

[Nikrnic]

Originally Posted by Greg 59

I'm not entirely sure what the percentage is but I always keep approx $1million in ready cash to act as a buffer against any unforeseen issues

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I like the way you think!

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[zengineer]

Originally Posted by Greg 59

I'm not entirely sure what the percentage is but I always keep approx $1million in ready cash to act as a buffer against any unforeseen issues

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That may be a good number to impress some folks here but I think those who know what their annual living costs are and keep 25 to 50% of that are the wiser of the bunch. I don't have a mortgage or car payment so $100k in readily accessible cash more than covers me.

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[dtwer]

Originally Posted by gtnator

I don’t think percentage of income is the right metric, it should be months of living EXPENSES. Most financial planners recommend having at least 6 months worth of living expenses on hand. Any more and you’ll be missing out on investments, but every situation is different. It also depends on how stable your job/income is.


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This.

Putting any more money beyond necessary in an account that generates less returns than inflation is akin to giving money away.

This depreciation of currencies will likely become more evident post COVID due to countries around the globe printing money like mad to salvage their contracting economies.

[austinp]

600$. I've never needed any more cash than that.

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[Pongster]

Originally Posted by Greg 59

I'm not entirely sure what the percentage is but I always keep approx $1million in ready cash to act as a buffer against any unforeseen issues

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$1M? So just 10%? :)

[visualplane]

Is it better to have cash because I keep hearing about inflation? Am I better off using the cash to buy another rolex?

[77T]

Too catastrophic a step to keep anything approaching 1M idle. It’s like throwing away a New Platona every year.

A year’s living cost positioned in a MM or deposit account isn’t too bad - like throwing away a 26mm OP each year.




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[visualplane]

Originally Posted by 77T

Too catastrophic a step to keep anything approaching 1M idle. It’s like throwing away a New Platona every year.

A year’s living cost positioned in a MM or deposit account isn’t too bad - like throwing away a 26mm OP each year.




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Things just got real.

[77T]

Originally Posted by visualplane

Things just got real.

Glad I could help!


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[cdmorenot]

I keep 200% of monthly expenses X 18 cash on hand at all times.

100% in local currency

50% USD

50% EURO

I have no mortgage, no car payment and 0 debt so the number isn’t much.


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[Yess]

Originally Posted by icnbne

None, im still in mortgage jail and any extra goes in my offset account which can be used in rainy days

Same here... And I would think this is fairly liquid is it not, the offset account? Unless ATMs stop working! I treat it like my personal loan finance portal at a ridiculous low rate. Cash Money is cheap at the moment.

[alphadweller]

Right now 100% cash (spread between current accounts and physical cash). Not counting a small pension fund where I can readjust the asset classes.

I might put 20% of that cash in the stock market in the near future but holding off for now, waiting to see how the situation develops. I think it's going to get worse before it gets better and investment opportunities will manifest soon once we hit bottom.

In other words, I stay put for now.

[2ltdjorn]

would be interested to see how the answers changed with the way 2020 played out.

[Watchflair]

Originally Posted by 2ltdjorn

would be interested to see how the answers changed with the way 2020 played out.

No changes on my end-

[tritium8]

Originally Posted by RBradleigh

I have $30 i my wallet :)

Whoa! Easy there, daddy Warbucks!

[MrGoat]

I have close to 70% spread between FDIC insured accounts. This is because I was incredibly poor growing up and will not follow suit like family members and lose my butt in the market. I put play money away into the market every month. I also invest in properties and other endeavors. These are where I made my money but not where I will ever put a majority of my money. I also have credit limits that can cover a few years if all hell breaks loose and everything goes away.


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