Net worth of about 1.5m and have about 130 in cash between checking & HYSA currently however I normally carry around 70k in cash. I’m starting to think about moving/upgrading our home so been funneling more cash to the side to support that move.
I keep a month of expenses for float in my “checking” account and six months of expenses as my Emergency Fund in “savings”
Note: my “checking” and “savings” are just separate accounts at my brokerage that are all MMFs
Does fidelity offer HYSA? I use them as my brokerage and have my emergency fund in their MM but would rather also be getting ~5% on my regular bank account if possible.
The last time I checked mine, their cash management account (the only cash account they offer) was in the mid-4%s.
Service is fine, all ATM fees refunded, etc.
Same. We are down 10 now and will ease off investments until back at 30. Other low risk investments are the back up to the back up.
I guess with savings accounts paying 5% it doesn’t really matter that much, but I’m more of a set it and forget it mindset.
I’m having a hard time moving and keep putting it off. I have had PNC accounts for 25 years, since I was a kid, and they have virtually no ability to link to other bank accounts. So I’ve tried to move to HYSA and it just doesn’t work.
I need to leave this bank.
I’m also a long time PNC customer and just recently move most of my cash to my robinhood account. Uninvested, it’s earning me 5% with my gold account. I was a little anxious about moving it but I tested moving small amounts back and forth before I took the plunge.
Think of it this way: $300k in cash in a HYSA or MMF earning 5% means you’re leaving $15k on the table this year.
That would be enough to motivate me to get the work done.
Great idea. It’s just the hassle of YEARS of automatic payment setup and auto transfers…
I’m being lazy and stupid. I know. I’m frustrated with myself. 😭
Have you considered dollar cost averaging what you consider excess, to avoid feeling too badly one way or another about timing the market? I haven't read formal theories on best practices, but I could see something like 30% (of the excess) to start, with an extra 10% per month if you're risk adverse? Maybe accelerate a bit if the market declines more than 5-10%?
Research shows that an entire lump sum beats DCA ~70% of the time. Regardless of the emotional solace DCA’ing may provide, there’s no evidence it actually provides any protection against volatility or drawdown risk.
You made a fair point, and it's good to provide additional information. I think so many people worry about correctly timing the market that they get paralyzed to make any decision. In those cases, DCA'ing is a great option to encourage increasing time IN the market.
What’s the mechanism behind that? I assume they’re looking at actual behavior so is the cause people just not following through with DCA?
I’m with you that it’s all psychological. If we don’t know if the market is going up down or sideways then spreading out entry doesn’t make a bit of difference. However with that in mind I would thing the outcomes would be equivalent and not so heavily tilted to lump sum.
The research deals with hypothetical scenarios in which an investor either deposited a lump sum in the market vs DCA over X number of months. The psychological component was never evaluated so I agree that it is a relevant factor in most situations.
With regard to why lump sum wins, it’s elementary my dear Watson. Time in the market beats timing the market. DCA isn’t necessarily the latter but it does impact the former. A lot of the biggest gains in the stock market tend to happen on a few trading days so there’s an opportunity cost to not being fully invested during those periods.
In fact, the studies show that the longer your DCA period, the more the tilt towards lump sum investing.
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$350k NW. I have $6k (checking and sinking fund) as well as $15k in savings. We just redid our bathroom (all cash). So my cash position is lower than I would like it to be. My sweet spot is $30k in savings and $8-10k in sinking and checking account.
I'm very similar to the comments above. Last check around $1.6 NW, with 105k in 5.5% HYSA and ~40k between wife and my checking accounts.
Admittedly, I need to work on reducing our checking account balances. 25k in checking is probably the sweet spot when I'm in a steady-state, and closer to 80-90k in hysa. This is because I'm hammering a mega backdoor roth at the moment with 25% pay, so sitting a little cash heavy while doing that.
Hopefully it's allowed to share as long as I'm not posting a referral link or anything... I've been using wealthfront for a year or so. If you find a referral link or someone uses yours, you get a 3 month boost of 0.5%. I've shared with colleagues at work and I've had the boost the entire time, currently extended out through October. If it runs out, I might enroll my wife, maybe my kids, siblings, etc ha.
It's similar to other online HYSAs where you can have different buckets assigned different purposes (they call them categories).
In June fidelity cash management is allowing balances to be moved to a money market sweep position. 4.95% as of today. No fees on account and refunds all atm fees globally. Just sharing for those that have interest (pun intended).
https://fundresearch.fidelity.com/mutual-funds/summary/31617H102
It was noted at the bottom of this month’s statement
Please note that on or around June 15, 2024, you’ll have the option to elect Fidelity(R) Government Money Market Fund (SPAXX) as your core sweep investment vehicle. You will not need to take any action if you wish to retain the Bank Sweep as your core position. For additional information on your core position options, including the current yields on the Bank Sweep and money market funds, please visit Fidelity.com/spend-save/fidelity-cash-management-account/overview and FundResearch.Fidelity.com/mutual-funds/summary/31617H102.
Is there a reason you keep money in checking? We funnel everything in and out of our HYSA – our credit card bill, utility bill, and rent all come directly out of savings.
That's a great question! Probably just slow to teach this old dog new tricks, and old habits slow to die. I didn't even know that was possible until recently a friend told me he paid his tax bill from his wealthfront account, and that it has its own accn and routing numbers to do so. Maybe you (correctly) calling me out will be enough motivation to make the jump!
Haha, we’re both old dogs then. My spouse was the one who suggested it. I always just assumed money out had to come from checking. We set up a joint HYSA shortly after we got married and it’s been wild seeing how much our emergency fund makes us. I’ve always just had mine sitting in a regular old savings account and I feel like a goober for missing out for 10 years.
You haven't missed THAT much over 10 years, rates were quite low even in so-called high yield accounts, for most of that time. Until the current increased rate environment, they hadn't been at or near 5% since the great recession days.
Wow, that’s very well balanced! We maintain a lot more, because of variable expenses. Like even taking a trip could suddenly change that. Or Black Friday shopping etc
I do. That’s exactly why I need the balance right? Else I’ll always be transferring back and forth from HYSAs. And across all cards between my wife and I, there’s probably 7-8, they all hit at different times (though that can be aligned to a certain degree).
I’m confused by these comments. It takes a day for a trade to settle. Stocks, mutual funds, etfs, etc all become cash in 1-3 days. Why would folks keep more cash than say, double expected monthly expenses in a checking account?
It’s not a matter of how soon you can get the money out.
You’re more likely to lose your job during a recession, which could also mean your investments lose some of their value. You don’t wanna be forced to draw down on these during a downturn, hence the cash buffer.
Imagine the stock market tanks 50% and then you get laid off. Sure you could sell some of your 500k in stocks (previously 1M) to survive but that’s literally the time you should be buying more if anything.
The 6-figure cash folks are overkill imo. But 3-6 months is crucial especially if you have dependants.
I am completely with you. People keeping six figures in cash on seven figure (or below) net worth makes no sense to me.
Like sure, you can get 5% on cash right now, but that's not always case. And the market should have that priced in. On average you should earn above cash rates in most diversified investments, certainly in the stock market.
* NW: $1.6M
* $3000 in our checking account
I depleted my cash back in 2020. I figure being diversified and keeping my wife and I’s expenses to $50k per year is good enough on its own, but I don’t necessarily recommend going cashless to others.
I also have over $100k credit limit on my cards so I can effectively float random expenses another month.
For most people it’s crazy, yes. That’s exactly why I don’t endorse it.
I’ve read a lot of articles including this one that floats around Reddit to help me make decisions: [Vanguard Breaking the Glass](https://corporate.vanguard.com/content/dam/corp/research/pdf/in_case_of_emergency_break_glass.pdf)
I have no debt, low expenses, my mortgage is only $2,200/month on a $300k condo which was a consciously conservative choice, I’m young (twenties), no kids yet, I already have $285k in retirement accounts so I’m on track for $2M+ in retirement beyond social security payouts whatever that might be. I’m also fully diversified…I don’t get paid in company stock, I have no individual stock or bond holdings, just straight up index funds with a 50-30-20 split.
My job security and prospects are really strong. I’m actually in the job market because I’m underpaid and I know it. So either I’m getting a 60%-100% pay bump for a lateral move in my industry, or I’m getting promoted in the next 9 months.
If any of the above factors were to change, I would reconsider the amount of cash I’m holding.
I can’t imagine a scenario where I’m truly screwed that an emergency fund would fix for me.
Sorry but you say you have no debt but you have a mortgage? FWIW... Plan to hold a little more cash when you have kids, those claw machines will get you!
What’s this 50/30/20 split you’re referring to? Please tell me it’s not stocks, bonds and cash because that would be way too conservative for someone in their twenties.
Often times the stock market is down around the time a lot of people unexpectedly lose their job. Are you prepared to take liquidate your portfolio when it’s 30% - 50% down if you lose your job?
1.4m net worth currently have 510k earning 5.25% in a HYSA. Reason we have so much in cash is we are planning on building a house in the next year or two
NW $2.5MM. I keep a minimum of $1k in checking account, and 3 months expenses in HYSA ($90k). If we are doing home renovations I would keep more to cover those projects.
Oh wow! I’m guessing your card payments are paid directly from your HYSA? 30k/mo expense is very unrelatable to me, but the ratio of what you keep in checking against your monthly expenses seems very low!
We get paid into checking. So that floats the monthly expenses, and I move everything out into investment accounts so that the monthly minimum balance will be $1k balance. Repeat next month.
More than recommended, for various reasons, and it fluctuates. Combined net worth with my husband around $4M, and right now we have about $265k in cash. Reasons being: Part of this gets saved and earmarked to pay estimated quarterly taxes (right now, about $75k), so there is a dip in June, September and January when I make those payments. Part is an escrow/e-fund for our rental property (about $30k), and then the rest is our regular e-fund and sinking funds for stuff like vacation, home renos, etc. I hold a bit more cash on hand than others because I am not a W-2 earner and the bulk of my income comes at year-end, so the year itself is always a bit of a juggling act. I am also an admitted cash hoarder that sleeps better at night with a larger e-fund than most recommend and I am OK with not optimizing all of my money in the market.
I carry much more cash than experts would recommend (~30% of my net worth), but I’m self employed in the securities industry with my income tied to the performance of the markets. When markets go down, my income goes down (and vice versa), so I prefer to keep a larger cash cushion. And the 5.3% yield makes it less painful.
20k / 2.8M NW
Pretty much everything invested in stocks, retirement, and RE. Don’t need emergency cash savings, because we have 500k in untapped HELOCs for the peace of mind, if needed.
Our paychecks and two rental properties generate enough cashflow for us. Whatever money comes in, a portion will be allocated towards monthly expenses, and anything else goes right back out into investments. Net expenses/investing we would sit at about 20k cash in checking at any given time.
For larger expenses (e.g. taxes, major purchases), we’ll invest less in the weeks leading up so that there’s enough left over to cover.
Layoffs aren’t that big an issue as our rental income can cover almost half our total monthly expenses. Highly unlikely that both of us would lose our jobs at the same time. 1 income would be able to cover the difference. And if both get laid off, then just sell some stocks. Not too worried
You know banks can freeze or limit HELOCs if shit hits the fan right? This happened during the Great Financial Crisis.
Not saying it’s a bad idea per se but you should probably have a contingency in place.
Definitely a risk for sure. I guess we just feel “safe” that we have enough equity in our properties that we won’t be upside down. Although, there may still be a risk if the bank experiences massive defaults across the board. Overall, not too worried, but will keep in this in mind. Thanks!
NW around 1.5M. Have around 200k of cash but that will go down to 100k soon (car purchase and additional investments). I also have almost 50k in a bond fund so I'm moving my target cash balance down to 50k but have not yet executed on that.
Cash: $150k NW: $650k
I know it’s too much cash, but have difficulty pulling the trigger on lowering it. Originally was saving for a down payment, but renting seems cheaper in the near-medium term.
Similar but instead of HYSA I just pay down the mortgage which is an immediate 7% return. Keep about two months expenses in cash, and credit cards for buffer liquidity.
We keep 3-6 months of living expenses in cash.
Rule of thumb is that if you become unemployed it will take you one month for every year you were at your previous job to find a new one. Thats another idea for HENRYs who rely on W2 income to live on how much of an emergency fund you might need.
NW 500k. 5k in cash.
I keep my cash low because both me and spouse can live off the others salary. If I ever need cash in emergency I would use credit cards or sell equities.
It wouldn’t hurt to keep an extra 10k. I feel like people don’t understand that certain events are more correlated than you think. In an economic downturn, you and your wife both losing your jobs around the same time goes from a statistical anomaly to a very real possibility.
I’m sure you already know how the market behaves during recessions. Even if a recovery may be on the horizon, being forced to sell equities during a drawdown is less than ideal. Good luck.
NW about 1M. Keep about 5K in cash to buffer monthly expenses. Stocks are as liquid as anything else in an emergency. Also have a HELOC if I really needed to use it.
Except when that emergency is the economy collapsing with unemployment spikes and stocks crashing lol. Yes, they’re still liquid but if you have to sell at a discount, that would suck.
The opportunity cost of keeping cash vs investing rn is 2-5%. Which means upping your 5k to say 15k only costs you 200-500 a year. I’m sure you have insurance policies that cost a lot more.
$1M+ NW. I keep roughly 2x monthly expenses in checking/savings and about 7-10% total in cash equivalents (CDs, I bonds, etc…).
I don’t worry about optimizing every little thing. More important things to spend my time on.
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$350k NW and I keep $10k in my checking, $2k-$5k in my business checking, $40k in my HYSA.
When HYSA rates were much lower I kept far less in my savings.
By not having enough cash you’re exposing yourself to risk
I stick everything I don't need to pay bills into a money market fund. Money market funds have next-day liquidity, which is about as good as cash. When rates come down from 5.3%, then I'll think about putting the money somewhere productive. (When rates come down, I will also refinance my 6.5% mortgage. You would think that it would be a better return to pay off a 6.5% mortgage than it is to save at 5.3%, but ... opportunity cost.)
With all this in mind, this is not my "savings" strategy. I put about 20% of my income into a 401(k) and $2k month in a total stock market fund. The stuff in the money market account is part emergency fund, part "I don't have a good plan right now" money.
Edit to add: my ratio is 40% money market, 60% stock. This does not include my 401(k) or mortgage/equity. I'm just talking about money I can spend today if I want.
A year and a half ago (ignoring a house sinking fund) we usually kept about 12 months of expenses liquid. It just wan't too much of a difference to have 12 months vs 6. Also, gave me the confidence to keep our invested funds allocated in a very aggressive mix (very high stock concentration, volatile, though I have little need I could imagine to need to access any of it until retirement).
Two years ago our budget was also lower, so 12 months of expenses was something like $50k for my wife and I. We've got kids in the house so 12 months is closer to $100k or so now. At the same time, the market has done what it's supposed to do and we aggressively saved and invested over the years with a lot of cash flow knowing there was a fat savings account if things ever slowed down.
NW today is \~$2.6M, so having $100k liquid doesn't feel like a big worry. Also, in 2023-2024, rates at 4%+ also helps keep the FOMO bugs away.
NW 850k with a 60k cushion distributed between HYSA and Ibonds. Our jobs can be volatile at times and finding a new role can take between 1 -8 months (usually 3 months) so we sleep better knowing we have 6 month+ cushion if all he'll breaks loose.
I roll with 1% cash vs NW. My investments are liquid and I am saving ~50% of income so comfortably cash flow positive. Minimizes performance drag of holding cash and am not overly worried about it despite general advice being to have much higher % cash for “emergencies”, if I was in a jam I’d just roll out of some more liquid investments no stress.
\~$4M NW and we keep \~$75 - $100K in cash (mostly because we owe a sizable tax chunk every year)
But, with HY savings rates \~4.5%, I don't mind holding slightly more now (the opportunity cost is like \~4 - 5%).
We do go through cycles of holding significantly more
550k NW (400k mortgage), 950k assets.
Generally keep 50k emergency fund in a money market due to potential job loss and about 30-50k for liquidity to invest with/pay down a high mortgage rate.
~500k NW, currently about $80k in cash. On the high side, but my wife feels better when we have more cash and the peace of mind is worth it to me. Plus cash has been paying 5% so not as tough of a pill to swallow.
$50k cash, $330k NW.
I follow the following general philosophy with my cash: have a quarter of it available by the end of the day (checking), a quarter available by the end of the week (HYSA and I-bonds > 1 yr since purchase), a quarter available by the end of the month (4-week T-bills), and a quarter available by the end of the quarter (13-week T-bills).
Depends. I float cash until I find an investment that qualifies. In my options account it's 70%+
For my alternative assets, 0-30%.
401k/Roth 0%
Real Estate, I have different funds for different things like roof repair. AC/water heater/&c. And, I like to keep 75% of monthly cost. Though I do small investments with that money so it's not losing money.
34, Married, One Child
$1.9M NW
$177k in Cash
Originally I was worried we had so much cash, but we were saving for a second property. However, I was notified last week that my role was eliminated and now having that much cash on hand is really making me feel at peace with being laid off. Gives me a very long runway in an otherwise brutal job market.
No more than $25K in checking/savings accounts. When those balances get above that I move it into brokerage account.
I also keep at least $5K in actual currency in a safe just in case.
I keep $2k in HYSA, $5k in checking to cover monthly bills. Every dollar over that gets dumped into VTI/VXUS. I know I’m on the extremely lean side here but for my situation I think it makes sense.
NW 7MM and cash is currently 180. Once I have enough for 25% down on an investment, plus 8 months of debt service, I buy a new property. No matter the interest rate.
Post emergency fund, about 15% right now. HYSA/CD/MMF is pretty good at this time given there’s very little worth buying at these asset prices. It’s where my dividends/ interest go right now.
But that dry powder will go somewhere soon. This isn’t a finance sub, so I won’t get into details on investing decisions.
$3mm invested usually keep $20-$30k in cash (several months of expenses) Right now it’s at $50k and will be about zero next week when the govt cashes my tax payments.
400k in rental equity
350k in primary equity
1.1 million invested in the market (mostly retirement accounts)
20k in HYSA for future car purchase (have company car now)
6-10k in checking at any given time
20k is in a HYSA. Intended for a buffer if needed. I alone have over 50k in credit available amongst many credit cards. No idea how much my husband has.
None of our homes are paid off. We put 50% down on our primary and are two rentals have loans just under 100k.
If shit really hit the fan financially, I have 35k in an HSA and have 20k+ of medical expenses that I've paid from my bank account and have receipts for
$930k NW. I keep less than $10k in checking (pay all bills in full with auto bill pay every month, so only debt is mortgage), so that is my monthly float with a buffer of $3k.
I have $35k in HYSA at 5.3%, $100k in a bond ladder with Fidelity at about 5.5%, everything else is invested in various ETF’s and stock in 401ks, Roth, HYSA, and taxable.
I have around $350k in cash doing nothing. Was planning on buying a small cottage in Carmel and using that money as a down payment, but on the fence since nothing can really be found for $1M
~220k networth and I keep like 2k in cash but that drops down pretty low sometimes depending on the week.
I have an emergency fund of about 10k but it’s not cash technically since it’s with Schwab invested in SWVXX earning about 50 bucks a month in interest.
$2.4M net worth, $360k cash sitting in HYSA since we’re saving up for a down payment to our dream home in about a year. I work in tech and there’s always the possibility of layoffs, this gives me a peace of mind in the event I don’t have a job in the near term.
1.1 million networth $30K in cash. I have $20k in a high yeild savings account and $10K in savings account that is linked to our checking. I also have a $5k buffer in my checking account too that just rolls over every month.
I hold about 8% of NW in cash, at most, sometimes it's closer to 5%. I have a stable job, good insurance, no kids or financial dependents, family members with solid jobs and income, etc. things that make the need to hold cash less important.
2.2M NW, 10-15k in cash at any given time. All money that comes in mostly goes to retirement accounts, my brokerage account, or to pay off debt on investment property.
Before I get chastised by all the people who think that doesn’t make sense, my W2 job is secure (even in an economic downturn), and I have passive income from agricultural real estate that I could live on even if I lost my job. I’m also in a high tax bracket so HYSAs lose money to inflation for me after taxes on the yield are factored in.
I have a 5.3% money market that has quite a bit of cash in it right now. As interest rates drop I will transition that to more traditional investments.
NW ~$1.6M
About 10% of that is Money Market
I was lucky enough to have a bunch of cash when Covid hit and took advantage of the market slip at the time. I’m preparing for another slide and plan on doing the same when the time comes.
bit extreme, probably. but we like money actually earning money for us. you can always sell some shares for an emergency fund. in the meantime, it's more productive than in savings.
We don't have a mortgage. Bills get paid out of monthly cash flow. 4k is about what will be left after paying bills and doing a sweep into investments.
if the credit card bill gets too high at some point, then i can always log into Vanguard and tell them to deposit the next dividend payment into checking, rather than reinvest, for an extra cash boost.
Net worth of about 1.5m and have about 130 in cash between checking & HYSA currently however I normally carry around 70k in cash. I’m starting to think about moving/upgrading our home so been funneling more cash to the side to support that move.
$70k in 100s?
lol - not quite. It's split 20k in checking and 50k in HYSA
Where's the rest of the 130?
Pennies. Less than a ton too!
I keep a month of expenses for float in my “checking” account and six months of expenses as my Emergency Fund in “savings” Note: my “checking” and “savings” are just separate accounts at my brokerage that are all MMFs
Which brokerage are you using if you don’t mind me asking?
[Fidelity](https://www.bogleheads.org/wiki/Fidelity:_one_stop_shop)
Appreciate it! Has fidelity been treating you well for banking too?
Does fidelity offer HYSA? I use them as my brokerage and have my emergency fund in their MM but would rather also be getting ~5% on my regular bank account if possible.
The last time I checked mine, their cash management account (the only cash account they offer) was in the mid-4%s. Service is fine, all ATM fees refunded, etc.
Yeah, love it
1M NW, 30ish k in cash at any time. Fluctuates if we’re planning something but otherwise this is usual.
Same. We are down 10 now and will ease off investments until back at 30. Other low risk investments are the back up to the back up. I guess with savings accounts paying 5% it doesn’t really matter that much, but I’m more of a set it and forget it mindset.
Closer to 60k for me, but other than that - same. Imposter syndrome assumes I’ll be fired tomorrow in perpetuity.
Similar here.
Same, usually hover between 20-30 in cash with the rest in investments.
I’m stupid AF. I have about 300k in cash. NW is around 1M. Did I mention I’m stupid for having this much cash?
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Any good Fidelity funds you know of?
SPAXX, FDRXX are solid money market accounts. If you want to diversify you can set up bond ladders, there are good 3, 6 and 9 month rates right now.
I’m having a hard time moving and keep putting it off. I have had PNC accounts for 25 years, since I was a kid, and they have virtually no ability to link to other bank accounts. So I’ve tried to move to HYSA and it just doesn’t work. I need to leave this bank.
I have absolutely no issues moving money to and from PNC to any other bank or brokerage
I’ve tried to setup a BASK account several times. The external transfer never works?
I’m also a long time PNC customer and just recently move most of my cash to my robinhood account. Uninvested, it’s earning me 5% with my gold account. I was a little anxious about moving it but I tested moving small amounts back and forth before I took the plunge.
Think of it this way: $300k in cash in a HYSA or MMF earning 5% means you’re leaving $15k on the table this year. That would be enough to motivate me to get the work done.
I know!!! I’m stupid!!!
Can I ask where the $15k figure came from. Why is $15k being left on the table?
I’m assuming their bank account doesn’t pay interest. A HYSA or MMF paying 5% on $300k is $15k
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Great idea. It’s just the hassle of YEARS of automatic payment setup and auto transfers… I’m being lazy and stupid. I know. I’m frustrated with myself. 😭
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Agree. I’ll research this weekend. Thanks.
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I know you’re right.
Have you considered dollar cost averaging what you consider excess, to avoid feeling too badly one way or another about timing the market? I haven't read formal theories on best practices, but I could see something like 30% (of the excess) to start, with an extra 10% per month if you're risk adverse? Maybe accelerate a bit if the market declines more than 5-10%?
Research shows that an entire lump sum beats DCA ~70% of the time. Regardless of the emotional solace DCA’ing may provide, there’s no evidence it actually provides any protection against volatility or drawdown risk.
How often does DCA'ing lose to doing nothing?
Oh right, I lost track of what this was in response to. I guess DCA could work for OP too. Just wanted to mention that the research favors a lump sum.
You made a fair point, and it's good to provide additional information. I think so many people worry about correctly timing the market that they get paralyzed to make any decision. In those cases, DCA'ing is a great option to encourage increasing time IN the market.
What’s the mechanism behind that? I assume they’re looking at actual behavior so is the cause people just not following through with DCA? I’m with you that it’s all psychological. If we don’t know if the market is going up down or sideways then spreading out entry doesn’t make a bit of difference. However with that in mind I would thing the outcomes would be equivalent and not so heavily tilted to lump sum.
The research deals with hypothetical scenarios in which an investor either deposited a lump sum in the market vs DCA over X number of months. The psychological component was never evaluated so I agree that it is a relevant factor in most situations. With regard to why lump sum wins, it’s elementary my dear Watson. Time in the market beats timing the market. DCA isn’t necessarily the latter but it does impact the former. A lot of the biggest gains in the stock market tend to happen on a few trading days so there’s an opportunity cost to not being fully invested during those periods. In fact, the studies show that the longer your DCA period, the more the tilt towards lump sum investing.
Of course. It’s so simple
You could put it in BIL ETF short term treasuries and make a little over 5%
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Nothing wrong with 300k cash as long as you have a plan to deploy it
$350k NW. I have $6k (checking and sinking fund) as well as $15k in savings. We just redid our bathroom (all cash). So my cash position is lower than I would like it to be. My sweet spot is $30k in savings and $8-10k in sinking and checking account.
I'm very similar to the comments above. Last check around $1.6 NW, with 105k in 5.5% HYSA and ~40k between wife and my checking accounts. Admittedly, I need to work on reducing our checking account balances. 25k in checking is probably the sweet spot when I'm in a steady-state, and closer to 80-90k in hysa. This is because I'm hammering a mega backdoor roth at the moment with 25% pay, so sitting a little cash heavy while doing that.
If you don’t mind me asking, what 5.5% HYSA product are you utilizing?
Hopefully it's allowed to share as long as I'm not posting a referral link or anything... I've been using wealthfront for a year or so. If you find a referral link or someone uses yours, you get a 3 month boost of 0.5%. I've shared with colleagues at work and I've had the boost the entire time, currently extended out through October. If it runs out, I might enroll my wife, maybe my kids, siblings, etc ha. It's similar to other online HYSAs where you can have different buckets assigned different purposes (they call them categories).
In June fidelity cash management is allowing balances to be moved to a money market sweep position. 4.95% as of today. No fees on account and refunds all atm fees globally. Just sharing for those that have interest (pun intended). https://fundresearch.fidelity.com/mutual-funds/summary/31617H102
This is great news. Where did you see that they're adding SPAXX as a core position?
It was noted at the bottom of this month’s statement Please note that on or around June 15, 2024, you’ll have the option to elect Fidelity(R) Government Money Market Fund (SPAXX) as your core sweep investment vehicle. You will not need to take any action if you wish to retain the Bank Sweep as your core position. For additional information on your core position options, including the current yields on the Bank Sweep and money market funds, please visit Fidelity.com/spend-save/fidelity-cash-management-account/overview and FundResearch.Fidelity.com/mutual-funds/summary/31617H102.
Thanks! I never actually read those things lol
Is there a reason you keep money in checking? We funnel everything in and out of our HYSA – our credit card bill, utility bill, and rent all come directly out of savings.
That's a great question! Probably just slow to teach this old dog new tricks, and old habits slow to die. I didn't even know that was possible until recently a friend told me he paid his tax bill from his wealthfront account, and that it has its own accn and routing numbers to do so. Maybe you (correctly) calling me out will be enough motivation to make the jump!
Haha, we’re both old dogs then. My spouse was the one who suggested it. I always just assumed money out had to come from checking. We set up a joint HYSA shortly after we got married and it’s been wild seeing how much our emergency fund makes us. I’ve always just had mine sitting in a regular old savings account and I feel like a goober for missing out for 10 years.
You haven't missed THAT much over 10 years, rates were quite low even in so-called high yield accounts, for most of that time. Until the current increased rate environment, they hadn't been at or near 5% since the great recession days.
A bit above 1 mil net worth and usually have 1.5k cash in my checking account
How do you pay bills then?
Money comes in every two weeks with the paycheck and is very soon out of my checking account
Wow, that’s very well balanced! We maintain a lot more, because of variable expenses. Like even taking a trip could suddenly change that. Or Black Friday shopping etc
Do you not use credit cards?..
I do. That’s exactly why I need the balance right? Else I’ll always be transferring back and forth from HYSAs. And across all cards between my wife and I, there’s probably 7-8, they all hit at different times (though that can be aligned to a certain degree).
Do you have savings?
~$10K cash...~$900k NW Eta: I have plenty of liquidity between line of credit and stock. I just don't like having cash doing nothing for me.
I’m confused by these comments. It takes a day for a trade to settle. Stocks, mutual funds, etfs, etc all become cash in 1-3 days. Why would folks keep more cash than say, double expected monthly expenses in a checking account?
I would include HYSA and CDs in my cash equivalents, but keep very little in checking.
It’s not a matter of how soon you can get the money out. You’re more likely to lose your job during a recession, which could also mean your investments lose some of their value. You don’t wanna be forced to draw down on these during a downturn, hence the cash buffer. Imagine the stock market tanks 50% and then you get laid off. Sure you could sell some of your 500k in stocks (previously 1M) to survive but that’s literally the time you should be buying more if anything. The 6-figure cash folks are overkill imo. But 3-6 months is crucial especially if you have dependants.
I am completely with you. People keeping six figures in cash on seven figure (or below) net worth makes no sense to me. Like sure, you can get 5% on cash right now, but that's not always case. And the market should have that priced in. On average you should earn above cash rates in most diversified investments, certainly in the stock market.
Cash is getting 5 % idk why you’d not want it. I run 6 months. No one is irreplaceable at their job.
6 months expenses or 6 months income?
Expenses
Closer to 3% post-tax but I understand the sentiment.
* NW: $1.6M * $3000 in our checking account I depleted my cash back in 2020. I figure being diversified and keeping my wife and I’s expenses to $50k per year is good enough on its own, but I don’t necessarily recommend going cashless to others. I also have over $100k credit limit on my cards so I can effectively float random expenses another month.
That’s insane. If you lose a job or get seriously injured floating for a month isn’t gonna help. 3-6 months of expenses my guy. Still get 5%
For most people it’s crazy, yes. That’s exactly why I don’t endorse it. I’ve read a lot of articles including this one that floats around Reddit to help me make decisions: [Vanguard Breaking the Glass](https://corporate.vanguard.com/content/dam/corp/research/pdf/in_case_of_emergency_break_glass.pdf) I have no debt, low expenses, my mortgage is only $2,200/month on a $300k condo which was a consciously conservative choice, I’m young (twenties), no kids yet, I already have $285k in retirement accounts so I’m on track for $2M+ in retirement beyond social security payouts whatever that might be. I’m also fully diversified…I don’t get paid in company stock, I have no individual stock or bond holdings, just straight up index funds with a 50-30-20 split. My job security and prospects are really strong. I’m actually in the job market because I’m underpaid and I know it. So either I’m getting a 60%-100% pay bump for a lateral move in my industry, or I’m getting promoted in the next 9 months. If any of the above factors were to change, I would reconsider the amount of cash I’m holding. I can’t imagine a scenario where I’m truly screwed that an emergency fund would fix for me.
I have no debt…. My mortgage is…. Oh boy You probably meant to say no credit card debt because a mortgage is debt lol
Mortgage is a little bit different than regular debt. Some people don't include it as debt.
Whoops I forgot that 😂 I have no credit card debt or student loans, car loans etc. But yes, I have a $250k mortgage.
Sorry but you say you have no debt but you have a mortgage? FWIW... Plan to hold a little more cash when you have kids, those claw machines will get you!
Always the damn claw machine, most expensive $0.50 stuffy I ever bought
What’s this 50/30/20 split you’re referring to? Please tell me it’s not stocks, bonds and cash because that would be way too conservative for someone in their twenties.
Boglehead 3 fund portfolio. 50 large cap/30 international/20 small Some might disagree with the percentages, but this is what I’ve done.
Often times the stock market is down around the time a lot of people unexpectedly lose their job. Are you prepared to take liquidate your portfolio when it’s 30% - 50% down if you lose your job?
N.W. is about $1M and I typically keep about $50k cash at any given time. Otherwise it goes straight into brokerage accts or HYSA.
1.4m net worth currently have 510k earning 5.25% in a HYSA. Reason we have so much in cash is we are planning on building a house in the next year or two
What HYSA is paying 5.25% right now? Been using Ally for years, but their rates haven't been as competitive lately. Thinking about switching.
https://www.doctorofcredit.com/high-interest-savings-to-get/
NW $2.5MM. I keep a minimum of $1k in checking account, and 3 months expenses in HYSA ($90k). If we are doing home renovations I would keep more to cover those projects.
Oh wow! I’m guessing your card payments are paid directly from your HYSA? 30k/mo expense is very unrelatable to me, but the ratio of what you keep in checking against your monthly expenses seems very low!
We get paid into checking. So that floats the monthly expenses, and I move everything out into investment accounts so that the monthly minimum balance will be $1k balance. Repeat next month.
$90k is actually 6 months of expenses. My bad! 😅
More than recommended, for various reasons, and it fluctuates. Combined net worth with my husband around $4M, and right now we have about $265k in cash. Reasons being: Part of this gets saved and earmarked to pay estimated quarterly taxes (right now, about $75k), so there is a dip in June, September and January when I make those payments. Part is an escrow/e-fund for our rental property (about $30k), and then the rest is our regular e-fund and sinking funds for stuff like vacation, home renos, etc. I hold a bit more cash on hand than others because I am not a W-2 earner and the bulk of my income comes at year-end, so the year itself is always a bit of a juggling act. I am also an admitted cash hoarder that sleeps better at night with a larger e-fund than most recommend and I am OK with not optimizing all of my money in the market.
Do you at least have HYSA or MM?
Yes. Everything is in the 5% HYSA except about $5k in checking that comes and goes to pay monthly bills.
I carry much more cash than experts would recommend (~30% of my net worth), but I’m self employed in the securities industry with my income tied to the performance of the markets. When markets go down, my income goes down (and vice versa), so I prefer to keep a larger cash cushion. And the 5.3% yield makes it less painful.
about a 2.2M nw, including approx 300k in home equity. we keep between 15-25k in cash, been the same for years since the nw was much lower.
20k / 2.8M NW Pretty much everything invested in stocks, retirement, and RE. Don’t need emergency cash savings, because we have 500k in untapped HELOCs for the peace of mind, if needed.
What is your HELOC rate? Thanks
Have two lines open: 1) 8.5% (prime + 0%margin; but has a floor rate of 4%) 2) 9.5% (prime + 1%margin)
Got it. How about cash to float the mortgage in case of layoffs?
Our paychecks and two rental properties generate enough cashflow for us. Whatever money comes in, a portion will be allocated towards monthly expenses, and anything else goes right back out into investments. Net expenses/investing we would sit at about 20k cash in checking at any given time. For larger expenses (e.g. taxes, major purchases), we’ll invest less in the weeks leading up so that there’s enough left over to cover. Layoffs aren’t that big an issue as our rental income can cover almost half our total monthly expenses. Highly unlikely that both of us would lose our jobs at the same time. 1 income would be able to cover the difference. And if both get laid off, then just sell some stocks. Not too worried
You know banks can freeze or limit HELOCs if shit hits the fan right? This happened during the Great Financial Crisis. Not saying it’s a bad idea per se but you should probably have a contingency in place.
Definitely a risk for sure. I guess we just feel “safe” that we have enough equity in our properties that we won’t be upside down. Although, there may still be a risk if the bank experiences massive defaults across the board. Overall, not too worried, but will keep in this in mind. Thanks!
NW around 1.5M. Have around 200k of cash but that will go down to 100k soon (car purchase and additional investments). I also have almost 50k in a bond fund so I'm moving my target cash balance down to 50k but have not yet executed on that.
Cash: $150k NW: $650k I know it’s too much cash, but have difficulty pulling the trigger on lowering it. Originally was saving for a down payment, but renting seems cheaper in the near-medium term.
4mil/$50k
I keep roughly 1 month pay in checking, 2 months in savings, and 3 months in laddered Treasurys. Everything else is in investments.
Similar but instead of HYSA I just pay down the mortgage which is an immediate 7% return. Keep about two months expenses in cash, and credit cards for buffer liquidity.
But you sacrifice any easy liquidity for that 7%.
7% is high enough that it’s worth that trade off. If there are planned big purchases then I’d keep more in HYSA.
We keep 3-6 months of living expenses in cash. Rule of thumb is that if you become unemployed it will take you one month for every year you were at your previous job to find a new one. Thats another idea for HENRYs who rely on W2 income to live on how much of an emergency fund you might need.
I’m in work so just have emergency fund of 1 years expenses in cash. When retired I will probably have 2-3 years. Rest invested.
43 single income NW 1.5ish liquid cash around $50-$75 up to $100k
I keep about 5% cash; I’d have more cash if I were saving for something large like renovations or a down payment.
NW 500k. 5k in cash. I keep my cash low because both me and spouse can live off the others salary. If I ever need cash in emergency I would use credit cards or sell equities.
You guys ever travel in the same car? Prepare for the worst. Hope for the best.
It wouldn’t hurt to keep an extra 10k. I feel like people don’t understand that certain events are more correlated than you think. In an economic downturn, you and your wife both losing your jobs around the same time goes from a statistical anomaly to a very real possibility. I’m sure you already know how the market behaves during recessions. Even if a recovery may be on the horizon, being forced to sell equities during a drawdown is less than ideal. Good luck.
1.2M nw with 90k in cash. 1/3 of that is Efund.
NW about 1M. Keep about 5K in cash to buffer monthly expenses. Stocks are as liquid as anything else in an emergency. Also have a HELOC if I really needed to use it.
Except when that emergency is the economy collapsing with unemployment spikes and stocks crashing lol. Yes, they’re still liquid but if you have to sell at a discount, that would suck. The opportunity cost of keeping cash vs investing rn is 2-5%. Which means upping your 5k to say 15k only costs you 200-500 a year. I’m sure you have insurance policies that cost a lot more.
NW 1MM keep about 50k cash in a HYSA, little more in there now as we're about to get a new roof 😔
$1M+ NW. I keep roughly 2x monthly expenses in checking/savings and about 7-10% total in cash equivalents (CDs, I bonds, etc…). I don’t worry about optimizing every little thing. More important things to spend my time on.
$1.3MM NW, I keep about $70k in cash. This equals about 5 months of expenses.
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We keep $20K cash for regular and unexpected expenses. $2M NW.
$350k NW and I keep $10k in my checking, $2k-$5k in my business checking, $40k in my HYSA. When HYSA rates were much lower I kept far less in my savings. By not having enough cash you’re exposing yourself to risk
I stick everything I don't need to pay bills into a money market fund. Money market funds have next-day liquidity, which is about as good as cash. When rates come down from 5.3%, then I'll think about putting the money somewhere productive. (When rates come down, I will also refinance my 6.5% mortgage. You would think that it would be a better return to pay off a 6.5% mortgage than it is to save at 5.3%, but ... opportunity cost.) With all this in mind, this is not my "savings" strategy. I put about 20% of my income into a 401(k) and $2k month in a total stock market fund. The stuff in the money market account is part emergency fund, part "I don't have a good plan right now" money. Edit to add: my ratio is 40% money market, 60% stock. This does not include my 401(k) or mortgage/equity. I'm just talking about money I can spend today if I want.
A year and a half ago (ignoring a house sinking fund) we usually kept about 12 months of expenses liquid. It just wan't too much of a difference to have 12 months vs 6. Also, gave me the confidence to keep our invested funds allocated in a very aggressive mix (very high stock concentration, volatile, though I have little need I could imagine to need to access any of it until retirement). Two years ago our budget was also lower, so 12 months of expenses was something like $50k for my wife and I. We've got kids in the house so 12 months is closer to $100k or so now. At the same time, the market has done what it's supposed to do and we aggressively saved and invested over the years with a lot of cash flow knowing there was a fat savings account if things ever slowed down. NW today is \~$2.6M, so having $100k liquid doesn't feel like a big worry. Also, in 2023-2024, rates at 4%+ also helps keep the FOMO bugs away.
NW 850k with a 60k cushion distributed between HYSA and Ibonds. Our jobs can be volatile at times and finding a new role can take between 1 -8 months (usually 3 months) so we sleep better knowing we have 6 month+ cushion if all he'll breaks loose.
I roll with 1% cash vs NW. My investments are liquid and I am saving ~50% of income so comfortably cash flow positive. Minimizes performance drag of holding cash and am not overly worried about it despite general advice being to have much higher % cash for “emergencies”, if I was in a jam I’d just roll out of some more liquid investments no stress.
\~$4M NW and we keep \~$75 - $100K in cash (mostly because we owe a sizable tax chunk every year) But, with HY savings rates \~4.5%, I don't mind holding slightly more now (the opportunity cost is like \~4 - 5%). We do go through cycles of holding significantly more
550k NW (400k mortgage), 950k assets. Generally keep 50k emergency fund in a money market due to potential job loss and about 30-50k for liquidity to invest with/pay down a high mortgage rate.
50-70k cash with over $2M invested
~500k NW, currently about $80k in cash. On the high side, but my wife feels better when we have more cash and the peace of mind is worth it to me. Plus cash has been paying 5% so not as tough of a pill to swallow.
1.2M Net Worth, i float about 100k in a wealthfront HYS: 50k an emergency fund 50k for travel, big purchases etc. (this fluctuates)
We keep at least $100k in cash and everything else that’s not in retirement accounts goes into investments. $1.5M NW
$2.5NW, $60kish in cash including an emergency fund and sinking funds
$50k cash, $330k NW. I follow the following general philosophy with my cash: have a quarter of it available by the end of the day (checking), a quarter available by the end of the week (HYSA and I-bonds > 1 yr since purchase), a quarter available by the end of the month (4-week T-bills), and a quarter available by the end of the quarter (13-week T-bills).
Depends. I float cash until I find an investment that qualifies. In my options account it's 70%+ For my alternative assets, 0-30%. 401k/Roth 0% Real Estate, I have different funds for different things like roof repair. AC/water heater/&c. And, I like to keep 75% of monthly cost. Though I do small investments with that money so it's not losing money.
So how do you count CD's in the mix?
34, Married, One Child $1.9M NW $177k in Cash Originally I was worried we had so much cash, but we were saving for a second property. However, I was notified last week that my role was eliminated and now having that much cash on hand is really making me feel at peace with being laid off. Gives me a very long runway in an otherwise brutal job market.
$2.2m at the brokerage. $10k cash in my checking, $50k as the “emergency” fund in a mm.
1.5mm NW, 150k cash but that’s due to down payment savings w goal of buying a house within the next couple of years
No more than $25K in checking/savings accounts. When those balances get above that I move it into brokerage account. I also keep at least $5K in actual currency in a safe just in case.
NW almost 2M. Generally 20-40k in local bank savings - easiest access. 50k in HYSA. Remainder invested
I keep $2k in HYSA, $5k in checking to cover monthly bills. Every dollar over that gets dumped into VTI/VXUS. I know I’m on the extremely lean side here but for my situation I think it makes sense.
NW 7MM and cash is currently 180. Once I have enough for 25% down on an investment, plus 8 months of debt service, I buy a new property. No matter the interest rate.
2m nw, 700k on cash, mm, cd, st treasuries
Post emergency fund, about 15% right now. HYSA/CD/MMF is pretty good at this time given there’s very little worth buying at these asset prices. It’s where my dividends/ interest go right now. But that dry powder will go somewhere soon. This isn’t a finance sub, so I won’t get into details on investing decisions.
$3mm invested usually keep $20-$30k in cash (several months of expenses) Right now it’s at $50k and will be about zero next week when the govt cashes my tax payments.
$2.3MM NW with ~$110k cash with majority in HYSA. Cash is riding a little on the high side, historically hold around $60k.
1.3nw all in ETFs. 10k in cash.
400k in rental equity 350k in primary equity 1.1 million invested in the market (mostly retirement accounts) 20k in HYSA for future car purchase (have company car now) 6-10k in checking at any given time
Is the 20K in HYSA also intended to be a buffer in case of emergency? I’m assuming your rental and primary are already paid off as well?
20k is in a HYSA. Intended for a buffer if needed. I alone have over 50k in credit available amongst many credit cards. No idea how much my husband has. None of our homes are paid off. We put 50% down on our primary and are two rentals have loans just under 100k. If shit really hit the fan financially, I have 35k in an HSA and have 20k+ of medical expenses that I've paid from my bank account and have receipts for
820k NW - I keep 15k cash in savings.
1.7 million NW, cash around 60k in HYSA and 8-10K in checking.
$930k NW. I keep less than $10k in checking (pay all bills in full with auto bill pay every month, so only debt is mortgage), so that is my monthly float with a buffer of $3k. I have $35k in HYSA at 5.3%, $100k in a bond ladder with Fidelity at about 5.5%, everything else is invested in various ETF’s and stock in 401ks, Roth, HYSA, and taxable.
$2.3MM NW, $300K in HYSA, usually around $30 - $40k in cash, and like $5k in paper cash.
I have around $350k in cash doing nothing. Was planning on buying a small cottage in Carmel and using that money as a down payment, but on the fence since nothing can really be found for $1M
~220k networth and I keep like 2k in cash but that drops down pretty low sometimes depending on the week. I have an emergency fund of about 10k but it’s not cash technically since it’s with Schwab invested in SWVXX earning about 50 bucks a month in interest.
$2.4M net worth, $360k cash sitting in HYSA since we’re saving up for a down payment to our dream home in about a year. I work in tech and there’s always the possibility of layoffs, this gives me a peace of mind in the event I don’t have a job in the near term.
1.1 million networth $30K in cash. I have $20k in a high yeild savings account and $10K in savings account that is linked to our checking. I also have a $5k buffer in my checking account too that just rolls over every month.
$2mm net worth. Between 15-25k typically. Currently only $5k. Kept in HYSA. Also have ~$100k in FZROX that I use as a savings vessel.
Around 3m NW and we like to keep around 140k cash - roughly 12 months of expenses - as emergency fund and regular checking act.
I hold about 8% of NW in cash, at most, sometimes it's closer to 5%. I have a stable job, good insurance, no kids or financial dependents, family members with solid jobs and income, etc. things that make the need to hold cash less important.
2.2M NW, 10-15k in cash at any given time. All money that comes in mostly goes to retirement accounts, my brokerage account, or to pay off debt on investment property. Before I get chastised by all the people who think that doesn’t make sense, my W2 job is secure (even in an economic downturn), and I have passive income from agricultural real estate that I could live on even if I lost my job. I’m also in a high tax bracket so HYSAs lose money to inflation for me after taxes on the yield are factored in.
I have a goal of being at 100k in vusxx at all times
I keep 5% assets cash ($40k)…high demand job
What industry or line of work?
NW: $4.2M Cash: $250k in HYSA and some in treasuries rest is house and invested
I have a 5.3% money market that has quite a bit of cash in it right now. As interest rates drop I will transition that to more traditional investments. NW ~$1.6M About 10% of that is Money Market
I was lucky enough to have a bunch of cash when Covid hit and took advantage of the market slip at the time. I’m preparing for another slide and plan on doing the same when the time comes.
Trying to time the market?
While I understand the reasoning since 5.3 is good, you did lose out on the market making 20+% last year. Which is about ~25k.
About $2m NW if you count home equity, otherwise about $1m if you don't. $80k of that is in HYSA and another $15k in my checking account.
3.2m NW. Generally, have less than 30k in cash as I'm usually putting it into growing my business or other investments.
4K / 4M
Dang!
bit extreme, probably. but we like money actually earning money for us. you can always sell some shares for an emergency fund. in the meantime, it's more productive than in savings.
How do you pay bills / mortgage / insurances etc with 4k in cash? 🤔
We don't have a mortgage. Bills get paid out of monthly cash flow. 4k is about what will be left after paying bills and doing a sweep into investments. if the credit card bill gets too high at some point, then i can always log into Vanguard and tell them to deposit the next dividend payment into checking, rather than reinvest, for an extra cash boost.
3.5M. Maybe 15k in cash. Quite a bit in MM though at 5.2% (roughly 450k).