quote:

Originally posted by Aeteocles:

quote:

Originally posted by grumpy1:

quote:

Originally posted by Aeteocles:
Is there a good rule of thumb amount of cash to keep in the savings/checking account instead of in investments?

It varies by individual but I don't keep much in checking account. With Vanguard I can move money from my brokerage account to my checking account or vice versa if I want to. At least I can make 1.45% in Vanguard Prime MM versus next to nothing in my checking account. MM funds have no FDIC protection like in banks if that is a concern though.

1.45% in a non-FDIC insured money market account seems a little off?

American Express and a number of other banks offer 1.45% as an FDIC insured High-Yield Savings account...

They are trying to be competitive. My bank has not done such yet but I have so little in checking account it does not matter. I would still rather be in Vanguard MM as I can quickly move to another investment if I see an opportunity.

OUCH!

Time has come to shake out nervous Nellies to create buying opportunities but short term pain is never fun. It has been an epic run to the upside.

We've been due for a correction. The question is, just how much of a correction will we get?

Okay, so for those advocating 6-9+ months of "savings", what's the argument for keeping the money on hand in a checking or savings account, versus in an investment account that can be cashed out in a few days?

I understand the need for a reserve or an "emergency" fund, but wouldn't the reserve or emergency fund just need to hold you over until you can move money out of an investment?

6-9 months of cash on hand seems a little excessive when you can sell stocks and funds and have it wired to your bank in less than 10 days. Even if I had to sell my house to get the equity out of it, a house shouldn't sit on the market for more than 6 months.

What scenario am I missing?

That was painful...resisting the urge to panic. A couple more days like this and it will really hurt.

Bad thing was, I just re balanced my account and added a new $10k on Wednesday of last week. Then it started going down.

Me too.

I use a Dogs of the Dow approach and recently picked up 3 blue chippers at a good price. Had I waited until today I would have gotten a better price.

The dividend is comforting in a crazy market.

quote:

Originally posted by Aeteocles:
I understand the need for a reserve or an "emergency" fund, but wouldn't the reserve or emergency fund just need to hold you over until you can move money out of an investment?

The purpose of an emergency fund is so that you don't have to start liquidating actual investments that presumably are earning a decent return.

quote:

Originally posted by Aeteocles:
Okay, so for those advocating 6-9+ months of "savings", what's the argument for keeping the money on hand in a checking or savings account, versus in an investment account that can be cashed out in a few days?

I understand the need for a reserve or an "emergency" fund, but wouldn't the reserve or emergency fund just need to hold you over until you can move money out of an investment?

6-9 months of cash on hand seems a little excessive when you can sell stocks and funds and have it wired to your bank in less than 10 days. Even if I had to sell my house to get the equity out of it, a house shouldn't sit on the market for more than 6 months.

What scenario am I missing?

I keep a couple of months. I have access to tons of credit. No need to keep cash on the sidelines. I want any money that is not for a short or medium term goal going to tax deferred account earning market returns.

the last few days have been a correction, but most indicators for tomorrow are showing green.

I can't complain - I've done pretty good recently and there is nothing I want to sell, and a few I'd like to buy - I have some cash hanging out there just collecting dust

quote:

Originally posted by smschulz:
OUCH!

2ND That!

quote:

Originally posted by Aeteocles:
Okay, so for those advocating 6-9+ months of "savings", what's the argument for keeping the money on hand in a checking or savings account, versus in an investment account that can be cashed out in a few days?

I understand the need for a reserve or an "emergency" fund, but wouldn't the reserve or emergency fund just need to hold you over until you can move money out of an investment?

6-9 months of cash on hand seems a little excessive when you can sell stocks and funds and have it wired to your bank in less than 10 days. Even if I had to sell my house to get the equity out of it, a house shouldn't sit on the market for more than 6 months.

What scenario am I missing?

The number isn't just to cover you while you shuffle cash - that should indeed take days vs. months. Having that amount in cash is key to making sure unforeseen cash needs don't force you to have to sell stocks in a hurry during a crisis.

6-9 months worth of cash gives you a lot of wiggle room to weather corrections without freaking out and 'selling low'. If you have enough cash on hand, stocks getting cheaper can be seen as a buying opportunity rather than a calamity.

As to where said cash lives, an investment account isn't a bad place for some of it. Need to assess interest, safety and accessibility (does the account pay competitive interest, have FDIC (or SIPC) protection, allow you to write checks/transfer quickly and cheaply, offer a debit/cash card, etc.)

By the way, assuming you can sell a house quickly when you need cash is not a good general assumption - liquidity is not real estate's strong point. Depending on the rest of the situation, quickest way to raise cash from a house could be to take out a home equity line or second mortgage.

quote:

Originally posted by Aeteocles:
Okay, so for those advocating 6-9+ months of "savings", what's the argument for keeping the money on hand in a checking or savings account, versus in an investment account that can be cashed out in a few days?

I understand the need for a reserve or an "emergency" fund, but wouldn't the reserve or emergency fund just need to hold you over until you can move money out of an investment?

6-9 months of cash on hand seems a little excessive when you can sell stocks and funds and have it wired to your bank in less than 10 days. Even if I had to sell my house to get the equity out of it, a house shouldn't sit on the market for more than 6 months.

What scenario am I missing?

The housing market isn’t always as vibrant as you have had it in your location, in your life time.

It’s an expensive way to raise cash, brokerage, closing etc.

There is no better seller than he who must sell.

With respect to stock prices recently, I expect they will continue to fluctuate.

You have to do these things every once in awhile, to scare off all the sissies.

quote:

Originally posted by nhtagmember:
the last few days have been a correction, but most indicators for tomorrow are showing green.

I hope so, but I've been expecting a correction, a pretty significant correction, for some time.

I was hoping it'd hold off until we moved to cash out what remains of my 401k and pay off most of the balance of the mortgage.

We'll see.

I will begin to deploy cash tomorrow AM. Index funds.

quote:

Originally posted by FishOn:
I will begin to deploy cash tomorrow AM. Index funds.

I'll bet you will not be alone!

Yesterdays market action smacks of a programmed trade algorithm. The economic fundamentals are sound. Risk just got less risky.

Most mutual funds are now negative, YTD.
Though Futures seem to be making a bit of a come-back this morning.
Personal Performance, YTD: Negative -0.28% 01/01/2018 - 02/05/2018

One of the few times financial fortunes (not fortune!) have smiled on me.

I worked with a financial adviser recently to prepare for the day (if) I retire. Wanting to insure that I don't outlive my money, I made a decision to move half of my IRA money into a deferred annuity fund.

Last night I got a call from my adviser. After some banter about "how 'bout that stock market, hey?" he told me that the good news was that the money from my IRA had transferred BEFORE the 666 point slide. Whew!

quote:

Most mutual funds are now negative, YTD.

Well, yeah. A 4% drop in a month will do that.

No worries, still just fine and dandy and on track for retirement in 13 years. IOW, it's not a big deal no matter how many BREAKING NEWS ALERTS we have to endure.

Ugh, I went from an almost 5% return to negative. Wondering if I should back to a moderate split from a stock heavy aggressive one.