Opinion on Cash portion of portfolio

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lvswts
Posts: 19
Joined: Tue Nov 26, 2019 1:18 pm

Opinion on Cash portion of portfolio

Post by lvswts »

I value the advice I get here. I was curious if anyone had an opinion on my thoughts related to the cash (or near cash) portion of my portfolio.

I want to keep about 5% of the portfolio in relatively safe assets. Currently 5% results in about 2 years of our expenses.

I'm currently thinking:

20% in higher yielding FDIC insured accounts (Ally, Discovery, Capital One).
40% in CD's (new CD every month and just renew at whatever the new rate is as they mature).
40% in ultra short bond ETF's (broken down as follows)
- 20% in something like ICSH (corporate)
- 20% in something like SHV (treasuries).

Could this be better? I'm trying to find a balance between yield, safety, and liquidity.
annu
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Joined: Mon Nov 04, 2019 7:55 pm

Re: Opinion on Cash portion of portfolio

Post by annu »

I only keep cash in CD, with current yields, probably not worth the hassle
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Sandtrap
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Re: Opinion on Cash portion of portfolio

Post by Sandtrap »

lvswts wrote: Fri Apr 10, 2020 7:05 pm I value the advice I get here. I was curious if anyone had an opinion on my thoughts related to the cash (or near cash) portion of my portfolio.

I want to keep about 5% of the portfolio in relatively safe assets. Currently 5% results in about 2 years of our expenses.

I'm currently thinking:

50% in higher yielding FDIC insured accounts (Ally, Discovery, Capital One).
50% in CD's (new CD every month and just renew at whatever the new rate is as they mature).
40% in ultra short bond ETF's (broken down as follows)
- 20% in something like ICSH (corporate)
- 20% in something like SHV (treasuries).


Could this be better? I'm trying to find a balance between yield, safety, and liquidity.
This?

j :happy
Wiki Bogleheads Wiki: Everything You Need to Know
Trader Joe
Posts: 1997
Joined: Fri Apr 25, 2014 6:38 pm

Re: Opinion on Cash portion of portfolio

Post by Trader Joe »

lvswts wrote: Fri Apr 10, 2020 7:05 pm I value the advice I get here. I was curious if anyone had an opinion on my thoughts related to the cash (or near cash) portion of my portfolio.

I want to keep about 5% of the portfolio in relatively safe assets. Currently 5% results in about 2 years of our expenses.

I'm currently thinking:

20% in higher yielding FDIC insured accounts (Ally, Discovery, Capital One).
40% in CD's (new CD every month and just renew at whatever the new rate is as they mature).
40% in ultra short bond ETF's (broken down as follows)
- 20% in something like ICSH (corporate)
- 20% in something like SHV (treasuries).

Could this be better? I'm trying to find a balance between yield, safety, and liquidity.
I only keep 3-6 months of cash as my emergency fund. Have you read this?

https://www.bogleheads.org/wiki/Emergency_fund
averagedude
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Joined: Sun May 13, 2018 3:41 pm

Re: Opinion on Cash portion of portfolio

Post by averagedude »

As a procratinator, I hate CD's. I have had times when they renew automatically because of my lack of effort. At a high savings bank, this may not be a big deal. At a monster mega bank and alot of credit unions, this can be a bid deal. These places usually offer 1 or 2 terms with good rates, but the terms change often. I would go with a high yield savings account or a bond fund. Right now, expect high yield saving accounts to keep going lower, so their CD's are probably better deals to lock into.
mega317
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Joined: Tue Apr 19, 2016 10:55 am

Re: Opinion on Cash portion of portfolio

Post by mega317 »

I have two opinions.
1 is that is too much cash.
2 is to really optimize you will have to move things around as times change. I am not familiar with ICSH but SHV is yielding next to nothing and likely to drop more. There are few reasons to own that when you can use, for example no penalty CDs yielding 3 or 4 times as much. Unless you have millions.
https://www.bogleheads.org/forum/viewtopic.php?t=6212
patrick
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Location: Mega-City One

Re: Opinion on Cash portion of portfolio

Post by patrick »

I don't see much reason to invest in ultra short treasuries as they currently yield even less than FDIC insured accounts.

Series I savings bonds are probably a better "near cash" asset as they are inflation protected, have higher yields than regular inflation protect bonds, have a 0% semiannual floor so they won't go backwards at any point if there is intermittent deflation, and defer federal taxes. Do note that they can't be redeemed in the first year.
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KEotSK66
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Re: Opinion on Cash portion of portfolio

Post by KEotSK66 »

I would stick with the bank accts and cds
"i just got fluctuated out of $1,500", jerry
Topic Author
lvswts
Posts: 19
Joined: Tue Nov 26, 2019 1:18 pm

Re: Opinion on Cash portion of portfolio

Post by lvswts »

Thank you all. Very helpful. As a result of this I think I will drop down the percentage of cash and stick with a simpler/safer mix of CD's and FDIC insured accounts. You provided exactly what I needed. Thanks.
Dude2
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Location: Florida, USA

Re: Opinion on Cash portion of portfolio

Post by Dude2 »

If it helps, what I do is 1 year's expenses in a taxable money market (which is nowhere near my annual income). I just let this sit in my Vanguard sweep account (Federal Money Market).

Then I also use a stable value fund in my 401k (as part of my bond allocation) to accomplish this trick.
Wiki: Placing cash needs in a tax-advantaged account

This requires that I have stock funds in taxable. If I need to I can exchange Stable Value for S&P 500 in the 401k and sell Total Stock Market in taxable for cash.

That's all the cash I need to allow me to not tinker.
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Toons
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Re: Opinion on Cash portion of portfolio

Post by Toons »

Keep It Simple
Whatever you decide
:happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee
Caduceus
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Re: Opinion on Cash portion of portfolio

Post by Caduceus »

I was happy to use the sweep funds provided by brokerages that offered a good default interest rate, but some brokers are bad at that, so for those brokers I used BIL and SHV and was happy with those as cash-like substitutes.
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