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Is there a formula for this, or how do you decide how much to keep in your checking/savings account vs. investment portfolio? When we set up our Vanguard account, our adviser suggested $30,000 set aside that we could access easily. Now that we've moved, gotten set up here and don't need more material possessions I am wondering if that is too much just sitting there not "working" for us.
Of course, our situation is different than you up North as this is an all-cash culture, except for the supermarket. There is like a 10% surcharge on vendors accepting credit cards.
I'm wondering if we should move some of this idle money into the Vanguard account. But if "something" were to happen, how hard would it be to withdraw it again.....?
Of course, our situation is different than you up North as this is an all-cash culture, except for the supermarket. There is like a 10% surcharge on vendors accepting credit cards.
That is an argument for being more cash-heavy than those of us up North, since you won't be able to fall back on a cheap loan if sudden financial difficulties occur.
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I'm wondering if we should move some of this idle money into the Vanguard account. But if "something" were to happen, how hard would it be to withdraw it again.....?
It's not a question of how hard it would be to withdraw (it would be trivially easy, btw), but rather how many assets you'd have to sell in order to raise whatever amount of cash you need to deal with an emergency. Remember, markets go down as well as up! If the financial emergency occurred during a bear market, you might have to sell off twice as many assets as you'd have to sell in a bull market in order to raise the same amount of cash. And having to sell during a downturn is a financial move you really want to avoid if possible.
I don't know what percentage of your total wealth that $30k in cash represents, obviously, or how much you typically need to spend monthly to maintain your current standard of living, so obviously I can't give much specific advice. But I'd be tempted to keep that $30k liquid for now. Build a CD ladder if you want it to work a bit harder, but for now I'd avoid putting it into the market.
^^^Thanks Aredhel. Good advice. I should have listed what our monthly expenses are, to get any kind of idea. The average is only about $1,000, now that there is nothing big left to purchase. Any travel would be the only over-and-above.
I guess the peace of mind is worth a lot, too. We don't have lines of equity credit or that sort of thing here.
e set a side each years spending needs in cash instruments the first of the year . we can get cash anytime from our bond funds . some are so short they may move a penny
I’ll be 70 this year, and keep 40% of my portfolio liquid; money mkt, I Bonds, cash,
we move every 2-3 yrs., need to be liquid for our next chapter, which is months away.
I guess the peace of mind is worth a lot, too. We don't have lines of equity credit or that sort of thing here.
That's the sort of thing I think you need to hedge on a bit: a special assessment on your condo or a big car repair comes up and you need a chunk of change in short order, with no HELOC you can use to space the expense out over time.
Since you're newly retired, you also want to keep enough in conservative investments or as liquid cash to ride out a bear market without having to sell stocks. Those first five years or so in retirement are setting the rest of your retirement success up, you do NOT want to have to sell equities at a loss early on!
That's the sort of thing I think you need to hedge on a bit: a special assessment on your condo or a big car repair comes up and you need a chunk of change in short order, with no HELOC you can use to space the expense out over time.
Since you're newly retired, you also want to keep enough in conservative investments or as liquid cash to ride out a bear market without having to sell stocks. Those first five years or so in retirement are setting the rest of your retirement success up, you do NOT want to have to sell equities at a loss early on!
Very easy to get money transferred from investment accounts. Have a minimum floor in checking and another in savings. At points during the month dump excess into investments along with fixed weekly amounts.
That's the sort of thing I think you need to hedge on a bit: a special assessment on your condo or a big car repair comes up and you need a chunk of change in short order, with no HELOC you can use to space the expense out over time.
Since you're newly retired, you also want to keep enough in conservative investments or as liquid cash to ride out a bear market without having to sell stocks. Those first five years or so in retirement are setting the rest of your retirement success up, you do NOT want to have to sell equities at a loss early on!
HELOC is a cushion as the transfer is credited immediately.
keep in mind helocs were yanked just at the worst possible times in 2009-2009 . just when people needed them to pay bills .
of course the other problem is making loan payments can be tough when you lost a job and need money .
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