100% invested, all in, no cash- how do you do it?

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freckles01
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100% invested, all in, no cash- how do you do it?

Post by freckles01 » Wed Oct 11, 2017 5:48 pm

i've been reading threads re: cash holding and it varies all over the place.

there are some here that hold no cash and are 100% invested all the time. how do you do it?

i tried search terms "all invested" "100% invested" "all-in" "no cash" etc but couldn't find any posts detailing how to go no cash and be 100% invested.

can anyone explain how they do it?

i've always held cash and never considered that there was an alternate way of being until i came here and read a few people commenting that they hold no cash.
Last edited by freckles01 on Wed Oct 11, 2017 8:31 pm, edited 2 times in total.

dbr
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Re: 100% invested, all in, no cash- how do you do it?

Post by dbr » Wed Oct 11, 2017 6:11 pm

freckles01 wrote:
Wed Oct 11, 2017 5:48 pm
<t>i've been reading threads re: cash holding and it varies all over the place.<br/>
<br/>
there are some here that hold no cash and are 100% invested all the time. how do you do it? <br/>
<br/>
i tried search terms "all invested" "100% invested" "all-in" "no cash" etc but couldn't find any posts detailing how to go no cash and be 100% invested.</t>

can anyone explain how they do it?

i've always held cash and never considered that there was an alternate way of being until i came here and read a few people commenting that they hold no cash.
I don't think hold no cash means that literally there is no cash to be found in a person's accounts or pocket, not even $11.95 or $43.50. It means to not "hold" in the sense of purposely keeping a significant allocation to cash as an asset class. Almost everyone keeps some cash in a checking account or ends up with some cash in sweep account or a money market fund or on the side in a savings account for purposes of convenience and facility in managing daily finances. I say that I do not "hold" cash but in fact there is cash in various places that oscillates around between 1% and 2% of total assets.

Another point of view that I follow is that as an asset class there is no meaningful distinction between whatever one defines as cash and the general run of what people call "fixed income" or low risk investments. It is even possible to write checks on a bond fund, but I prefer a checking account that has actual cash. In reality the bulk of my daily transactions are charges against credit cards, which means that money "borrowed" against the card is a significant cash "holding" in my life. Of course there must be a monthly paying off of credit cards, so that is what that 1%-2% that floats around is partly engaged in doing.

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Re: 100% invested, all in, no cash- how do you do it?

Post by livesoft » Wed Oct 11, 2017 6:14 pm

We have an asset allocation of about 60% equities and 40% bond funds. And no cash. If we need to buy more equities, we simply exchange from our bond funds to our stock funds. Simple. Bond funds are up about 3.5% so far this year which is a much higher return than cash.
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Re: 100% invested, all in, no cash- how do you do it?

Post by dcarste » Wed Oct 11, 2017 6:15 pm

In my opinion 100% invested means, excluding 6 months of emergency expenses in very liquid assets (say a savings account at Ally earning interest plus your regular checking account), they are 100% invested in stocks and bonds - based on their risk tolerance.

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Re: 100% invested, all in, no cash- how do you do it?

Post by dbr » Wed Oct 11, 2017 6:19 pm

The expression really means that the person does not count as "invested" whatever cash he does have. I'm honest because I do keep a cash category in my portfolio accounting which includes sweep and money funds at brokers but does not count checking accounts, currency in my wallet, or cash "borrowed" in credit card balances. Some people are fastidious enough that they don't allow any money at brokers to not be invested in stocks or bonds. One way to do that is to transfer anything left over into their checking account, which does not count.

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Re: 100% invested, all in, no cash- how do you do it?

Post by czeckers » Wed Oct 11, 2017 6:20 pm

It's very straightforward.

An example is the popular three fund portfolio:

Total US market stock fund
Total International market stock fund
Total US bond fund

Viola! No cash.

If stocks go down and you feel you want to take advantage of the buying opportunity, simply rebalance by selling some of the bond fund.



An alternative point of view in favor of holding cash would be portfolios like the Harry Brown and Golden Butterfly portfolios which intentionally hold 20-25% cash to aid the portfolio in a deflationary scenario. This is also perfectly reasonable.

People in the distribution phase such as while in retirement may also hold one to several years worth of spending money in cash so as not to have to sell depreciated assets in the event of a market crash. Also perfectly reasonable.


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Re: 100% invested, all in, no cash- how do you do it?

Post by livesoft » Wed Oct 11, 2017 6:21 pm

^Well, can you let me have only cash turds in my investing accounts where a turd is defined as less than the value of 1 share of the cheapest ETF from Vanguard? I think that's less than $40 per account.
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Re: 100% invested, all in, no cash- how do you do it?

Post by McGilicutty » Wed Oct 11, 2017 6:59 pm

I say that I'm 100% invested, but really I'm only 99% invested or so. I keep between $9,000 and $10,000 in a checking account. That's about three months living expenses.

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Re: 100% invested, all in, no cash- how do you do it?

Post by Sandtrap » Wed Oct 11, 2017 7:08 pm

For myself, 100 % invested means what is "assigned".
I may have 2x in a combination emergency fund/working capital in high yield accounts or money market accounts but that is not "cash".
There may be 2x in a CD ladder but that is not "cash".
25x in a 30/70 allocation, again, not cash.
And so forth.
Like that.
:D

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Re: 100% invested, all in, no cash- how do you do it?

Post by Hyperborea » Wed Oct 11, 2017 7:59 pm

I was 100% invested (100% in stocks) until the year or so before I retired. What does that mean? It means that none of my allocation was to cash. I had cash but it was a relatively fixed dollar amount - fixed dollar emergency fund and a cash float at the credit union. The amount in cash was never rebalanced with the invested assets.

Now that I've retired that has changed somewhat and I've now got a cash percentage to my allocation because I am withdrawing from the portfolio. I want the cash to buffer somewhat the bad years.

P.S. The site doesn't understand HTML so all that doing it does is making your post harder to read. If you want to do formatting you will need to use BBCode which is a light weight HTML-like markup language.

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Re: 100% invested, all in, no cash- how do you do it?

Post by Phineas J. Whoopee » Wed Oct 11, 2017 8:06 pm

dbr wrote:
Wed Oct 11, 2017 6:19 pm
The expression really means that the person does not count as "invested" whatever cash he does have. I'm honest because I do keep a cash category in my portfolio accounting which includes sweep and money funds at brokers but does not count checking accounts, currency in my wallet, or cash "borrowed" in credit card balances. Some people are fastidious enough that they don't allow any money at brokers to not be invested in stocks or bonds. One way to do that is to transfer anything left over into their checking account, which does not count.
At Vanguard, in a converted-to-brokerage account, I recently and successfully used less than a dollar, maybe $0.68, something like that, in leftover settlement fund interest to buy far less than one share of a Vanguard mutual fund I already owned in my IRA. I simply placed the order online and it went through.

The benefit is one less line item for me to track.

PJW

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Re: 100% invested, all in, no cash- how do you do it?

Post by freckles01 » Wed Oct 11, 2017 8:41 pm

livesoft wrote:
Wed Oct 11, 2017 6:14 pm
We have an asset allocation of about 60% equities and 40% bond funds. And no cash. If we need to buy more equities, we simply exchange from our bond funds to our stock funds. Simple. Bond funds are up about 3.5% so far this year which is a much higher return than cash.
if you don't mind further detailing, how do you/family handle monthly bills, food, entertainment etc expenditures?

when bills come due, do you sell as needed? hold dividends?

i think its a very exciting concept to hold no cash except for an emergency fund

is there a book or article that might describe how its done?

freckles01
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Re: 100% invested, all in, no cash- how do you do it?

Post by freckles01 » Wed Oct 11, 2017 8:45 pm

Hyperborea wrote:
Wed Oct 11, 2017 7:59 pm
P.S. The site doesn't understand HTML so all that doing it does is making your post harder to read. If you want to do formatting you will need to use BBCode which is a light weight HTML-like markup language.
sorry, i saved a draft and the post loaded it up that way. edited to be easier on the eyes:)

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Re: 100% invested, all in, no cash- how do you do it?

Post by livesoft » Wed Oct 11, 2017 9:02 pm

freckles01 wrote:
Wed Oct 11, 2017 8:41 pm
livesoft wrote:
Wed Oct 11, 2017 6:14 pm
We have an asset allocation of about 60% equities and 40% bond funds. And no cash. If we need to buy more equities, we simply exchange from our bond funds to our stock funds. Simple. Bond funds are up about 3.5% so far this year which is a much higher return than cash.
if you don't mind further detailing, how do you/family handle monthly bills, food, entertainment etc expenditures?

when bills come due, do you sell as needed? hold dividends?

i think its a very exciting concept to hold no cash except for an emergency fund

is there a book or article that might describe how its done?
We don't even have an emergency fund per se. It is so simple there is no need for a book.

Most expenses go on a cash back credit card including some utilities, cell phone, etc. I don't use cash myself at all.

The credit card bill and other bills are paid through bank online bill pay from checking account. We know when the bills are due, so if not enough money has come in (dividends, tax refunds, consulting income), then I sell some shares and after the trade settles, I transfer to my checking account.

So yes I sell as needed and also use dividends as needed.
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freckles01
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Re: 100% invested, all in, no cash- how do you do it?

Post by freckles01 » Wed Oct 11, 2017 9:06 pm

i currently have about a year+ emergency funds in ally savings account plus checking with a fat buffer to pay monthly bills and pay most/all bills online. and have random gifted cash that i use for work potluck, work lotto, estate sales, taco truck eats kind of needs.

otherwise, i charge everything and pay it off each month.

my cash holding was a lot higher before opening a taxable account. its trimmed down to 40% of the original at least.

freckles01
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Re: 100% invested, all in, no cash- how do you do it?

Post by freckles01 » Wed Oct 11, 2017 9:19 pm

[/quote]
We know when the bills are due, so if not enough money has come in (dividends, tax refunds, consulting income), then I sell some shares and after the trade settles, I transfer to my checking account.

So yes I sell as needed and also use dividends as needed.
[/quote]

i think thats my real question regarding a book for no-cash living- how do you decide which/what shares to sell? is it determined by tax loss harvesting only?

i have no problem throwing more money into my taxable account but i haven't figured out how ( which fund/which buy lot) to use it :confused

livesoft
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Re: 100% invested, all in, no cash- how do you do it?

Post by livesoft » Wed Oct 11, 2017 9:23 pm

I sell parts of lot(s) that cost me the least taxes and preserve the most previously harvested losses. My brokerage accounts show the information needed to make a decision pretty clearly. That is, highest cost basis.

And actually, I have enough carryover losses that I don't pay taxes on these trades anyways, so it almost doesn't matter what I sell though I am usually selling shares held for the short-term, that is, the most recently purchased shares since I don't have to pay short-term capital gains taxes.
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freckles01
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Re: 100% invested, all in, no cash- how do you do it?

Post by freckles01 » Wed Oct 11, 2017 9:39 pm

livesoft wrote:
Wed Oct 11, 2017 9:23 pm
I sell parts of lot(s) that cost me the least taxes and preserve the most previously harvested losses. My brokerage accounts show the information needed to make a decision pretty clearly. That is, highest cost basis.

And actually, I have enough carryover losses that I don't pay taxes on these trades anyways, so it almost doesn't matter what I sell though I am usually selling shares held for the short-term, that is, the most recently purchased shares since I don't have to pay short-term capital gains taxes.
does it matter ( re selling) if its a mutual fund vs etf? i opened the taxable maybe 2 years ago so i don't think i have any tax loss harvesting (yet)

i would like to invest more so i may retire early (early 50's) but need to figure out a map to get there and live there if that makes any sense.

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Re: 100% invested, all in, no cash- how do you do it?

Post by livesoft » Wed Oct 11, 2017 10:01 pm

freckles01 wrote:
Wed Oct 11, 2017 9:39 pm
does it matter ( re selling) if its a mutual fund vs etf?
Not to me.

I showed screen captures of "lots" in this thread of mutual fund share sales:
viewtopic.php?t=179414
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Re: 100% invested, all in, no cash- how do you do it?

Post by stemikger » Wed Oct 11, 2017 10:45 pm

Not sure this is answering your question, but I have always been 100% invested between stocks and bonds. Currently 60/40 (stocks/bonds). I only hold a 3 month emergency fund because I have no mortgage. So the cash is not that big, I rather max out my 401K for the 50 and older extra contribution.
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Re: 100% invested, all in, no cash- how do you do it?

Post by pkcrafter » Wed Oct 11, 2017 11:50 pm

freckles01 wrote:
Wed Oct 11, 2017 5:48 pm
i've been reading threads re: cash holding and it varies all over the place.

there are some here that hold no cash and are 100% invested all the time. how do you do it?

i tried search terms "all invested" "100% invested" "all-in" "no cash" etc but couldn't find any posts detailing how to go no cash and be 100% invested.

can anyone explain how they do it?

i've always held cash and never considered that there was an alternate way of being until i came here and read a few people commenting that they hold no cash.
I think your confusion stems from the idea that all monies are invested, but that isn't what people do. Most people have investment money and they also have household operating money. So, when someone says they are 100% invested is stocks or stocks and bonds they are really only referring to their investible money, not total money. For instance, people cannot invest their entire paycheck. Many invest 10-15% of income on average, so that is what they refer to when mentioning asset allocation. Invested money may contain stocks, bonds and cash plus some other things like real estate.



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Re: 100% invested, all in, no cash- how do you do it?

Post by mega317 » Thu Oct 12, 2017 12:21 am

Like others I only have enough cash in the checking account to cover upcoming bills. And I also have no emergency fund. If an emergency comes up I would sell shares from the taxable brokerage account, and wouldn't hesitate to pay short-term capitals gains taxes if necessary. You're paying that same tax rate on interest from a savings account or similar, but your investments will either earn more or allow you to tax loss harvest.

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Re: 100% invested, all in, no cash- how do you do it?

Post by JoMoney » Thu Oct 12, 2017 12:31 am

The easiest way to do it, would be to do all your spending on a credit card and then sell a portion of your assets when it comes time to pay the bill.
...but technically that might be using leverage and putting you above 100% invested most of the time. You could also get into a synthetic leveraged position where you keep some cash for short-term spending but compensate with a leveraged position using futures, options, or a leveraged ETF such that your net balance was 100% (or perhaps more than) - index funds often use derivatives to keep 'fully invested' in the market.
Personally, my balance is somewhere between 90-99% invested and that's close enough to 100% for me.
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Re: 100% invested, all in, no cash- how do you do it?

Post by tetractys » Thu Oct 12, 2017 12:38 am

Most of my accounts are tax deferred, where it’s easy to have no cash. In taxable I do keep cash from distributions because I don’t want hundreds of tiny lots, and instead keep lots to a minimum $1,000. Cash for expenses I keep in the bank and never invest. — Tet

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Re: 100% invested, all in, no cash- how do you do it?

Post by gpburdell » Thu Oct 12, 2017 2:41 am

I'm 75/25/0 - stocks/bonds/cash. So I'm 0% cash when it comes to my investment portfolio. In reality, cash isn't always 0% as I let cash build up in my taxable account to a certain level before I buy new shares of whatever I'm short in. This cash is usually < 1% of my portfolio.

I exclude my checking account and emergency fund from the investment portfolio which is what makes it easy to be 0% cash.

My checking account has enough for 1 month's worth of expenses. I've structured it so that the balance stays roughly the same each month as paychecks come in and bills are paid out or money transferred to my taxable account.

So I'm 0% cash when it comes to investing, but I have cash available for other things. If the stock market tanks again like in 2008, I might consider investing part of my emergency fund, but would sell bonds first and adjust where new contributions go to.

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Re: 100% invested, all in, no cash- how do you do it?

Post by gpburdell » Thu Oct 12, 2017 2:49 am

mega317 wrote:
Thu Oct 12, 2017 12:21 am
Like others I only have enough cash in the checking account to cover upcoming bills. And I also have no emergency fund. If an emergency comes up I would sell shares from the taxable brokerage account, and wouldn't hesitate to pay short-term capitals gains taxes if necessary. You're paying that same tax rate on interest from a savings account or similar, but your investments will either earn more or allow you to tax loss harvest.
What if another 2008 happens and stocks drop 50% and an emergency comes up, are you still going to sell positions in your taxable account? You would be potentially turning paper losses into real loses.

ALso, I've heard people say they would use their credit card or heloc as an emergency fund. Problem is that banks can decrease, freeze or even close your lines of credit whenever they want. Financial institutions will do what is in their best interest not yours.

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Re: 100% invested, all in, no cash- how do you do it?

Post by SGM » Thu Oct 12, 2017 4:08 am

When we both worked we invested all of one paycheck and lived off the other. Later on when I had my own business we would always have the next month's expenses in cash. If we had larger expenses we would sell a position in stocks or bond funds. I also kept some cash aside near the end of the year or early the following year to top off a solo 401k when I knew exactly how much profit sharing was allowed. I never knew exactly how much I was going to earn until I did my taxes. I also kept a little cash in December to fund IRAs early in January and to start front loading the solo 401k. I didn't have to worry about employer matching.

Now as a retiree we have one spousal SS payment, and other income streams and dividends deposited in checking. If too much accumulates in checking some of it is invested usually every month. Sometimes stock sales are required to meet quarterly income and real estate taxes. I have never had an emergency fund but I always had job security. Early on I had disability insurance.

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Re: 100% invested, all in, no cash- how do you do it?

Post by Tamarind » Thu Oct 12, 2017 6:43 am

dbr wrote:
Wed Oct 11, 2017 6:19 pm
Some people are fastidious enough that they don't allow any money at brokers to not be invested in stocks or bonds.
This would be my definition. None of my retirement accounts contain cash or MM. Contributions are all automated to buy shares immediately. Dividends are automatically reinvested.

Of course I have cash in my checking account and emergency fund. In fact since I just crossed 6 figures invested this year, more than 10% of my net worth is liquid cash. But I'm not investing in cash and I don't hold dry powder. All of the money intended for investing is invested. Any cash is destined for a job other than investing - saving for next year's wedding, waiting to pay my credit card bills, etc.

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Re: 100% invested, all in, no cash- how do you do it?

Post by rmelvey » Thu Oct 12, 2017 7:00 am

I have 2 months of expenses in a checking account and the rest invested. I think that kind of set up is what most people mean when they say "100%" invested.

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Re: 100% invested, all in, no cash- how do you do it?

Post by David Scubadiver » Thu Oct 12, 2017 8:21 am

Back in my youth, I was 100% invested and in the literal sense. My checking account was the strong ulra short term municipal bond fund and that is where I kept my cash. And not just MY cash, but credit card advances at 0%! That was before I realized I would have to report a taxable transaction every time I made a withdrawl.

Thereafter, my cash was fully invested in the markets until reward checking accounts started paying 6% at which point I kept a bunch of cash in those accounts to earn some high premium -- even bought my first (and last) CD when rates were at 6%. These days I have cash sprinkled around because I don't always get a chance to invest after I sell something and because some of my portfolios just hold cash (like the Schwab Intelligent Portfolio).

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Re: 100% invested, all in, no cash- how do you do it?

Post by David Scubadiver » Thu Oct 12, 2017 8:24 am

rmelvey wrote:
Thu Oct 12, 2017 7:00 am
I have 2 months of expenses in a checking account and the rest invested. I think that kind of set up is what most people mean when they say "100%" invested.
The simplest thing I found was to deposit my paycheck into my schwab checking account. Every payday, I take the balance of what was in just prior to paycheck deposit, and invest it. But, that's a personal preference. I like living from paycheck to paycheck rather than figuring out what 2 months of my expenses are storing that cash in a low yielding account. Still, if I were inclined to do so, I would use a reward checking account to hold that money to maximize the return.

ETA: Although this is what I do, you also have to be cognizant of your credit card balance if you plan to pay that off in full at the end of the month. I have been making minimum payments for a while because of the 0% interest rate I'm paying.

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Re: 100% invested, all in, no cash- how do you do it?

Post by oldcomputerguy » Thu Oct 12, 2017 8:44 am

David Scubadiver wrote:
Thu Oct 12, 2017 8:24 am
The simplest thing I found was to deposit my paycheck into my schwab checking account. Every payday, I take the balance of what was in just prior to paycheck deposit, and invest it. But, that's a personal preference. I like living from paycheck to paycheck rather than figuring out what 2 months of my expenses are storing that cash in a low yielding account. Still, if I were inclined to do so, I would use a reward checking account to hold that money to maximize the return.

ETA: Although this is what I do, you also have to be cognizant of your credit card balance if you plan to pay that off in full at the end of the month. I have been making minimum payments for a while because of the 0% interest rate I'm paying.
One other thing one might need to be cognizant of (and this is just elementary household budgeting, so I may be pointing out the obvious), but some months have higher (sometimes much higher) expenses than others -- property taxes, homeowners insurance, auto insurance, just to name a few. So one must hold back a certain amount at times to cover these.
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Re: 100% invested, all in, no cash- how do you do it?

Post by bloom2708 » Thu Oct 12, 2017 8:58 am

Keep a small balance in your checking account (does that disqualify right there?)

Roth is the Emergency Fund, Taxable is used for lumpy spending

I wouldn't do it, but it can certainly work. We have cash for an Emergency Fund, Taxes (property and income), Car fund and Vacation fund.
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Re: 100% invested, all in, no cash- how do you do it?

Post by David Scubadiver » Thu Oct 12, 2017 9:43 am

oldcomputerguy wrote:
Thu Oct 12, 2017 8:44 am
David Scubadiver wrote:
Thu Oct 12, 2017 8:24 am
The simplest thing I found was to deposit my paycheck into my schwab checking account. Every payday, I take the balance of what was in just prior to paycheck deposit, and invest it. But, that's a personal preference. I like living from paycheck to paycheck rather than figuring out what 2 months of my expenses are storing that cash in a low yielding account. Still, if I were inclined to do so, I would use a reward checking account to hold that money to maximize the return.

ETA: Although this is what I do, you also have to be cognizant of your credit card balance if you plan to pay that off in full at the end of the month. I have been making minimum payments for a while because of the 0% interest rate I'm paying.
One other thing one might need to be cognizant of (and this is just elementary household budgeting, so I may be pointing out the obvious), but some months have higher (sometimes much higher) expenses than others -- property taxes, homeowners insurance, auto insurance, just to name a few. So one must hold back a certain amount at times to cover these.
Excellent point. And even more important for the folk who don't escrow taxes and insurance for their mortgage. Insurance (home, auto and life) always set me up for a rude awakening come the end of summer/start of fall! I just started a wisebanyan account for my rainy day fund. 15% equities 85% fixed income. That is where my "current" cash needs will be met until such time as I am led to believe that I am losing money by doing this.

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Re: 100% invested, all in, no cash- how do you do it?

Post by cjking » Thu Oct 12, 2017 10:31 am

I will describe myself as 100% equities even if/when 10% of my liquid net worth is in cash.

The reason 10% of my net worth might be in cash would be because I've withdrawn it as income in accordance with my withdrawal algorithm, and not yet thought of something to spend it on. I call this cash "savings" rather than "investments". I can spend any or all of my "savings" at any time, but can only spend "investments" after they have transmuted into "savings" by having passed through "withdrawal". The reason this cash is not considered to be part of my investments is because it is not subject to any of the rules governing investments. It's not part of my asset allocation, it's not part of the pot on which I calculate withdrawals. (If all cash had to be considered as part of "investments", money could never be counted as withdrawn until it was spent!)

The reason it won't be more than 10% is that I have a rule that says I have to skip withdrawals rather than go above 10%.

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Re: 100% invested, all in, no cash- how do you do it?

Post by mega317 » Thu Oct 12, 2017 12:12 pm

gpburdell wrote:
Thu Oct 12, 2017 2:49 am
mega317 wrote:
Thu Oct 12, 2017 12:21 am
Like others I only have enough cash in the checking account to cover upcoming bills. And I also have no emergency fund. If an emergency comes up I would sell shares from the taxable brokerage account, and wouldn't hesitate to pay short-term capitals gains taxes if necessary. You're paying that same tax rate on interest from a savings account or similar, but your investments will either earn more or allow you to tax loss harvest.
What if another 2008 happens and stocks drop 50% and an emergency comes up, are you still going to sell positions in your taxable account? You would be potentially turning paper losses into real loses.

ALso, I've heard people say they would use their credit card or heloc as an emergency fund. Problem is that banks can decrease, freeze or even close your lines of credit whenever they want. Financial institutions will do what is in their best interest not yours.
Very good points.
1. If I didn't want to own less stocks I would sell stocks in taxable and exchange bonds for stocks in tax-advantaged. The net effect is selling bonds. What I would do in real life is sell stocks and bonds in the necessary proportion to bring my asset allocation back to desired.
2. The difference between paper losses and real losses is a fallacy. The amount of money you have is the amount of money you have, and you could turn highly traded stock index funds into cash or vice versa any time.
3. I think most people around here realize a line of credit could disappear any minute. When people say they'll use a credit card, they mean there is almost no emergency for which you would need a large amount of cash in a checking account available NOW. You can pay most things with a credit card and then have a few days to sell investments or whatever.
4. The "no emergency fund" is probably only doable, or at least SWAN, if your taxable account is double your desired EF, so that in a 50% crash you still have the nominal dollar amount you want.

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Re: 100% invested, all in, no cash- how do you do it?

Post by flyingaway » Thu Oct 12, 2017 12:34 pm

livesoft wrote:
Wed Oct 11, 2017 6:14 pm
We have an asset allocation of about 60% equities and 40% bond funds. And no cash. If we need to buy more equities, we simply exchange from our bond funds to our stock funds. Simple. Bond funds are up about 3.5% so far this year which is a much higher return than cash.
I was having a feeling that you have 100% stocks.

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Re: 100% invested, all in, no cash- how do you do it?

Post by whodidntante » Thu Oct 12, 2017 12:37 pm

The regulars here seem to have an enormous pile of liquidity at their disposal. Such people do not need cash or an emergency fund. The guy who is bouncing checks, taking payday loans, or regularly paying interest on credit cards needed an emergency fund.

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Re: 100% invested, all in, no cash- how do you do it?

Post by livesoft » Thu Oct 12, 2017 12:37 pm

flyingaway wrote:
Thu Oct 12, 2017 12:34 pm
livesoft wrote:
Wed Oct 11, 2017 6:14 pm
We have an asset allocation of about 60% equities and 40% bond funds. And no cash. If we need to buy more equities, we simply exchange from our bond funds to our stock funds. Simple. Bond funds are up about 3.5% so far this year which is a much higher return than cash.
I was having a feeling that you have 100% stocks.
My asset allocation is described pretty well in this thread: Example online tools to analyze your portfolio's actual asset allocation
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Re: 100% invested, all in, no cash- how do you do it?

Post by flyingaway » Thu Oct 12, 2017 12:40 pm

I am 100% invested in stock funds (this is the bragging right), (except that I have 7 years of expenses kept in a separate bucket in fixed income).

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Re: 100% invested, all in, no cash- how do you do it?

Post by Phineas J. Whoopee » Thu Oct 12, 2017 1:02 pm

gpburdell wrote:
Thu Oct 12, 2017 2:49 am
...
What if another 2008 happens and stocks drop 50% and an emergency comes up, are you still going to sell positions in your taxable account? You would be potentially turning paper losses into real loses.
That's among the reasons many of us do not hold 100% of our portfolios in stocks. Fixed income provides a buffer. Also, a loss is a loss. Thinking of losses that have occurred as not existing can lead to poor decision making.

Furthermore, one can if one chooses cover cash needs in a tax-advantaged account.
gpburdell wrote: ALso, I've heard people say they would use their credit card or heloc as an emergency fund. Problem is that banks can decrease, freeze or even close your lines of credit whenever they want. Financial institutions will do what is in their best interest not yours.
I agree with you on that, and furthermore the most likely time for them to do so is when you are having a financial problem that decreases their confidence you can pay borrowed amounts back.

PJW

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Re: 100% invested, all in, no cash- how do you do it?

Post by qwertyjazz » Thu Oct 12, 2017 1:23 pm

I have been wondering about this too. The underlying problem is even with steady secure employment and a long investment horizon individual expenses are more granular. Different months have different expenses - car, trips, purchases etc. I would like to have next to no EF and an exceedingly small amounts of cash. I have been doing it with some matched funds for now that I can sell one or the other of. I think I need a larger taxable and number of funds as a function of monthly expenditure variability, I have not been able to wrap my head around this problem as well
IOW I also would appreciate any logistics advice on this
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Re: 100% invested, all in, no cash- how do you do it?

Post by Hyperborea » Thu Oct 12, 2017 1:35 pm

qwertyjazz wrote:
Thu Oct 12, 2017 1:23 pm
I have been wondering about this too. The underlying problem is even with steady secure employment and a long investment horizon individual expenses are more granular. Different months have different expenses - car, trips, purchases etc. I would like to have next to no EF and an exceedingly small amounts of cash. I have been doing it with some matched funds for now that I can sell one or the other of. I think I need a larger taxable and number of funds as a function of monthly expenditure variability, I have not been able to wrap my head around this problem as well
IOW I also would appreciate any logistics advice on this
I dealt with this issue by having a "float" in the bank account. Take the year's larger expenses and divide by the number of pay periods then add that much to the float with each paycheque. Over the year remove from that float for the expenses as they occur. You will of course need a certain minimum amount in the float greater than zero because you may have expenses early in the year that happen before you've accrued the cash to cover them.

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