I was going through my finances this weekend and started wondering if keeping 10% of my net worth in cash is too risky or just about right. Right now, the other 90% is in investments, but it’s got me curious about what others do.
How much of your net worth do you keep in cash? And do you keep the rest ‘working’ in investments? Any thoughts on the right balance would be helpful!
Thanks in advance!
I just keep around 6 months of expenses in cash. For me, thinking of it in terms of a percentage isn’t that useful.
Brynn said:
I just keep around 6 months of expenses in cash. For me, thinking of it in terms of a percentage isn’t that useful.
Yeah, the percentage thing gets weird. After a certain amount, like if you have millions, % stops being that relevant.
@Orin
Hey, can you buy me brake pads for my 2003 Corolla? I need like $60 haha
Brynn said:
I just keep around 6 months of expenses in cash. For me, thinking of it in terms of a percentage isn’t that useful.
I was like that too until now, close to retirement. With kids going to college and thinking about a retirement home, I’m holding more cash… though it’s still only about 10% of what we’ve got.
Brynn said:
I just keep around 6 months of expenses in cash. For me, thinking of it in terms of a percentage isn’t that useful.
Totally agree, I do the same!
Brynn said:
I just keep around 6 months of expenses in cash. For me, thinking of it in terms of a percentage isn’t that useful.
Isn’t this what most people do?
Brynn said:
I just keep around 6 months of expenses in cash. For me, thinking of it in terms of a percentage isn’t that useful.
Right now, I don’t have a regular income, but I have some projects that I hope will start paying off soon. I’ve got enough in my money market account for two years, which feels okay to me, but my wife is kind of worried.
Brynn said:
I just keep around 6 months of expenses in cash. For me, thinking of it in terms of a percentage isn’t that useful.
This seems like a solid approach.
Brynn said:
I just keep around 6 months of expenses in cash. For me, thinking of it in terms of a percentage isn’t that useful.
Could use some more thoughts here on if a cash reserve of this size is right for retirement planning?
Cash or just stuff you can easily liquidate? I keep my ‘cash’ in a high-yield savings account (HYSA), so it’s still earning some interest while being ready for emergencies.
Dai said:
Cash or just stuff you can easily liquidate? I keep my ‘cash’ in a high-yield savings account (HYSA), so it’s still earning some interest while being ready for emergencies.
I’m in trouble if I ever need actual cash because I barely keep any physical cash around.
Dai said:
Cash or just stuff you can easily liquidate? I keep my ‘cash’ in a high-yield savings account (HYSA), so it’s still earning some interest while being ready for emergencies.
We only keep around $1,000 cash at home. There’s no reason to hold $50k in physical cash—emergencies just don’t usually require that. We have 6-9 months of expenses in our HYSA, which can be moved to our checking account pretty quickly.
@Koa
Yeah, most people don’t mean actual cash sitting in a drawer. ‘Cash’ here usually means money in checking or savings that you can get to fast. Like, that HYSA of yours counts as ‘cash’ in this sense.
Dai said:
Cash or just stuff you can easily liquidate? I keep my ‘cash’ in a high-yield savings account (HYSA), so it’s still earning some interest while being ready for emergencies.
So, does BND count as cash, or is that too much of an investment?
We keep about 9 months of living expenses on hand, but no way would I invest that in stocks or anything that risky. Every other dollar is in investments as soon as it comes in.
Drew said:
We keep about 9 months of living expenses on hand, but no way would I invest that in stocks or anything that risky. Every other dollar is in investments as soon as it comes in.
For big stuff, like a car or a new appliance, do you pull from your cash fund and then try to get back to this level over time? Or do you sell some investments?
@Emily
Exactly what I was wondering!
@Emily
Lately, I’ve just been using T-bills with rates as high as they are now when I know I have a big purchase coming up.
@Emily
I wouldn’t consider a new car an ‘emergency expense.’ For stuff like that, I’d use the emergency fund only if there was an unexpected repair, then work to build it back up.