time to invest cash reserves?

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Topic Author
feh
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time to invest cash reserves?

Post by feh »

During the last 6 months of acrimony, we have not touched our portfolio. We rode the market down and back up.

The one thing we didn't do that we usually would: invest excess cash (that is, monies left over after maxing out our tax-advantaged accounts). So now, we have about $75K sitting in cash that we usually would not.

Time to put that money to work? Are the worst of the pandemic-induced gyrations over?
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TomatoTomahto
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Re: time to invest cash reserves?

Post by TomatoTomahto »

I feel ya. I’m accumulating cash also, not by selling (haven’t), but because I’m resisting purchasing with spare cash. My autopilot tax advantaged purchases continue.

I wish i had a suggestion for you.
I get the FI part but not the RE part of FIRE.
burritoLover
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Re: time to invest cash reserves?

Post by burritoLover »

No one knows. The best time to invest additional money would have been when the market was low during the March - May ish period. Had you stuck with your original plan you would have been buying shares at lower prices. If you didn’t do that because you were afraid of losing your jobs at that time then your emergency fund sounds like it needs beefing up.
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Silk McCue
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Re: time to invest cash reserves?

Post by Silk McCue »

Huge mistake in abandoning your Boglehead ways by timing the market by not investing in your normal fashion. You would likely have come out ahead and even done better had you rebalanced.

This is the problem with being a market timer. You are now asking folks that have no idea where the market will be next week, month or year when you should invest. No one can know except in hindsight.

Cheers
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dogagility
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Re: time to invest cash reserves?

Post by dogagility »

feh wrote: Sun Aug 30, 2020 6:58 am During the last 6 months of acrimony, we have not touched our portfolio. We rode the market down and back up.

The one thing we didn't do that we usually would: invest excess cash (that is, monies left over after maxing out our tax-advantaged accounts). So now, we have about $75K sitting in cash that we usually would not.

Time to put that money to work? Are the worst of the pandemic-induced gyrations over?
What do you intend to purchase with this cash?

Is that spend going to be 5 years or more in the future. If so, I would invest it accordingly. If you are a conservative investor, invest less of this cash in a stock index fund(s).

If that spend is less than 5 years in the future, then keep it in some sort of fixed income vehicle (or cash).

Market timing is a fool's errand.
All children spill milk. Learn to smile and wipe it up. -- A Farmer's Wife
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corn18
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Re: time to invest cash reserves?

Post by corn18 »

The best time to invest money is when you have it. The best time to withdraw money is when you need it. Pretty simple.
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Topic Author
feh
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Re: time to invest cash reserves?

Post by feh »

dogagility wrote: Sun Aug 30, 2020 7:13 am
feh wrote: Sun Aug 30, 2020 6:58 am During the last 6 months of acrimony, we have not touched our portfolio. We rode the market down and back up.

The one thing we didn't do that we usually would: invest excess cash (that is, monies left over after maxing out our tax-advantaged accounts). So now, we have about $75K sitting in cash that we usually would not.

Time to put that money to work? Are the worst of the pandemic-induced gyrations over?
What do you intend to purchase with this cash?

Is that spend going to be 5 years or more in the future. If so, I would invest it accordingly. If you are a conservative investor, invest less of this cash in a stock index fund(s).

If that spend is less than 5 years in the future, then keep it in some sort of fixed income vehicle (or cash).

Market timing is a fool's errand.
The money would be invested according to our AA (60/40).

For all those chastising not to time the market: I'm familiar w/ the mantra. Given the unprecedented situation of the pandemic and that this represents about 2% of our portfolio I'm not feeling guilty about it.
KlangFool
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Re: time to invest cash reserves?

Post by KlangFool »

OP,

I am increasing my cash reserve if and when my portfolio goes up by X amount. And, I am taking a small portion of that cash to buy physical Gold/Silver. But, in my case, I am unemployed and I had reached my FI number. It is time to de-risk my portfolio.

I am updating my IPS with this new strategy.


KlangFool
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feh
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Re: time to invest cash reserves?

Post by feh »

KlangFool wrote: Sun Aug 30, 2020 7:20 am OP,

I am increasing my cash reserve if and when my portfolio goes up by X amount. And, I am taking a small portion of that cash to buy physical Gold/Silver. But, in my case, I am unemployed and I had reached my FI number. It is time to de-risk my portfolio.

I am updating my IPS with this new strategy.


KlangFool
If it makes any difference, we are FI, but still working part time (because I enjoy it).
KlangFool
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Re: time to invest cash reserves?

Post by KlangFool »

feh wrote: Sun Aug 30, 2020 7:23 am
KlangFool wrote: Sun Aug 30, 2020 7:20 am OP,

I am increasing my cash reserve if and when my portfolio goes up by X amount. And, I am taking a small portion of that cash to buy physical Gold/Silver. But, in my case, I am unemployed and I had reached my FI number. It is time to de-risk my portfolio.

I am updating my IPS with this new strategy.


KlangFool
If it makes any difference, we are FI, but still working part time (because I enjoy it).
Time to increase CASH and Gold/Silver.


It is a Risk versus Reward tradeoff. The gain is insignificant. The loss and threat of hyperinflation and deflation are significant.


FYI. My AA is 60/40 too.

KlangFoo;
Topic Author
feh
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Re: time to invest cash reserves?

Post by feh »

KlangFool wrote: Sun Aug 30, 2020 7:26 am Time to increase CASH and Gold/Silver.


It is a Risk versus Reward tradeoff. The gain is insignificant. The loss and threat of hyperinflation and deflation are significant.


FYI. My AA is 60/40 too.

KlangFoo;
We don't hold precious metals, and I'm not interested in starting now.

If you are concerned about inflation, why would you hold cash?
Olemiss540
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Re: time to invest cash reserves?

Post by Olemiss540 »

feh wrote: Sun Aug 30, 2020 7:19 am
dogagility wrote: Sun Aug 30, 2020 7:13 am
feh wrote: Sun Aug 30, 2020 6:58 am During the last 6 months of acrimony, we have not touched our portfolio. We rode the market down and back up.

The one thing we didn't do that we usually would: invest excess cash (that is, monies left over after maxing out our tax-advantaged accounts). So now, we have about $75K sitting in cash that we usually would not.

Time to put that money to work? Are the worst of the pandemic-induced gyrations over?
What do you intend to purchase with this cash?

Is that spend going to be 5 years or more in the future. If so, I would invest it accordingly. If you are a conservative investor, invest less of this cash in a stock index fund(s).

If that spend is less than 5 years in the future, then keep it in some sort of fixed income vehicle (or cash).

Market timing is a fool's errand.
The money would be invested according to our AA (60/40).

For all those chastising not to time the market: I'm familiar w/ the mantra. Given the unprecedented situation of the pandemic and that this represents about 2% of our portfolio I'm not feeling guilty about it.
A few questions given your response:
1.) What were you hoping to accomplish by holding out 2% in cash when you are already FI and have 40% of your account in fairly stable bond investments?
2.) We are very much in the middle of a pandemic still, what is any better now than back in March?

You are basing your investing decisions on emotions driven purely by the movement of the stock market. No one has any idea what the market is going to do, we only expect a risk premium if we hold on and stay invested. By letting your emotions guide your investing decisions, you lost out of a great buying opportunity we now know in hindsight. Invest the cash today, realize you have a substantial amount of assets in bonds you can liquidate during market gyrations to prevent selling equities low, and quit worrying about the markets typical gyrations. The market will average one 40% decline every 4 years or so. Congrats on being FI!
I hold index funds because I do not overestimate my ability to pick stocks OR stock pickers.
KlangFool
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Re: time to invest cash reserves?

Post by KlangFool »

feh wrote: Sun Aug 30, 2020 7:44 am
KlangFool wrote: Sun Aug 30, 2020 7:26 am Time to increase CASH and Gold/Silver.


It is a Risk versus Reward tradeoff. The gain is insignificant. The loss and threat of hyperinflation and deflation are significant.


FYI. My AA is 60/40 too.

KlangFoo;
We don't hold precious metals, and I'm not interested in starting now.

If you are concerned about inflation, why would you hold cash?

CASH for deflation.


Gold/Silver for hyperinflation.


<<We don't hold precious metals, and I'm not interested in starting now.>>

Then, your assumption is hyperinflation is not possible. I know that I know nothing. Hence, I keep some Gold/Silver as my hyperinflation insurance.

KlangFool
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feh
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Re: time to invest cash reserves?

Post by feh »

KlangFool wrote: Sun Aug 30, 2020 8:12 am CASH for deflation.


Gold/Silver for hyperinflation.


<<We don't hold precious metals, and I'm not interested in starting now.>>

Then, your assumption is hyperinflation is not possible. I know that I know nothing. Hence, I keep some Gold/Silver as my hyperinflation insurance.

KlangFool
We hold TIPS.
KlangFool
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Re: time to invest cash reserves?

Post by KlangFool »

feh wrote: Sun Aug 30, 2020 8:19 am
KlangFool wrote: Sun Aug 30, 2020 8:12 am CASH for deflation.


Gold/Silver for hyperinflation.


<<We don't hold precious metals, and I'm not interested in starting now.>>

Then, your assumption is hyperinflation is not possible. I know that I know nothing. Hence, I keep some Gold/Silver as my hyperinflation insurance.

KlangFool
We hold TIPS.

feh,


And, how would that helps you in the case of hyperinflation? In my opinion, it does not.


KlangFool
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Re: time to invest cash reserves?

Post by flaccidsteele »

feh wrote: Sun Aug 30, 2020 6:58 am During the last 6 months of acrimony, we have not touched our portfolio. We rode the market down and back up.

The one thing we didn't do that we usually would: invest excess cash (that is, monies left over after maxing out our tax-advantaged accounts). So now, we have about $75K sitting in cash that we usually would not.

Time to put that money to work? Are the worst of the pandemic-induced gyrations over?
I haven’t put excess money to work since March. No reason to do it now
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat
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Sandtrap
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Re: time to invest cash reserves?

Post by Sandtrap »

With volatility concerns, why not adjust your IPS to a more conservative allocation permanently?
IE: 50/50 or 40/60??

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ThePrince
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Re: time to invest cash reserves?

Post by ThePrince »

Silk McCue wrote: Sun Aug 30, 2020 7:12 am Huge mistake in abandoning your Boglehead ways by timing the market by not investing in your normal fashion. You would likely have come out ahead and even done better had you rebalanced.

This is the problem with being a market timer. You are now asking folks that have no idea where the market will be next week, month or year when you should invest. No one can know except in hindsight.

Cheers
+1
tibbitts
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Re: time to invest cash reserves?

Post by tibbitts »

feh wrote: Sun Aug 30, 2020 6:58 am During the last 6 months of acrimony, we have not touched our portfolio. We rode the market down and back up.

The one thing we didn't do that we usually would: invest excess cash (that is, monies left over after maxing out our tax-advantaged accounts). So now, we have about $75K sitting in cash that we usually would not.

Time to put that money to work? Are the worst of the pandemic-induced gyrations over?
Obviously if you haven't invested for the last six months, now isn't the time to even restart normal additions to investments much less invest some lump sum you've been accumulating. You're locked out of the market until you see the market drop below the lowest point it was at during the period you weren't investing those new excess funds. No exceptions. If that leaves you out of the market with those excess funds for the rest of you life, that's what was meant to be.
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corn18
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Re: time to invest cash reserves?

Post by corn18 »

KlangFool wrote: Sun Aug 30, 2020 8:30 am
feh wrote: Sun Aug 30, 2020 8:19 am
KlangFool wrote: Sun Aug 30, 2020 8:12 am CASH for deflation.


Gold/Silver for hyperinflation.


<<We don't hold precious metals, and I'm not interested in starting now.>>

Then, your assumption is hyperinflation is not possible. I know that I know nothing. Hence, I keep some Gold/Silver as my hyperinflation insurance.

KlangFool
We hold TIPS.

feh,


And, how would that helps you in the case of hyperinflation? In my opinion, it does not.


KlangFool
How does gold help in hyperinflation?
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KlangFool
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Re: time to invest cash reserves?

Post by KlangFool »

corn18 wrote: Sun Aug 30, 2020 10:09 am
KlangFool wrote: Sun Aug 30, 2020 8:30 am
feh wrote: Sun Aug 30, 2020 8:19 am
KlangFool wrote: Sun Aug 30, 2020 8:12 am CASH for deflation.


Gold/Silver for hyperinflation.


<<We don't hold precious metals, and I'm not interested in starting now.>>

Then, your assumption is hyperinflation is not possible. I know that I know nothing. Hence, I keep some Gold/Silver as my hyperinflation insurance.

KlangFool
We hold TIPS.

feh,


And, how would that helps you in the case of hyperinflation? In my opinion, it does not.


KlangFool
How does gold help in hyperinflation?
Gold/Silver will go up to 10X to 30X during hyperinflation.


KlangFool
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corn18
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Re: time to invest cash reserves?

Post by corn18 »

KlangFool wrote: Sun Aug 30, 2020 10:12 am
corn18 wrote: Sun Aug 30, 2020 10:09 am
KlangFool wrote: Sun Aug 30, 2020 8:30 am
feh wrote: Sun Aug 30, 2020 8:19 am
KlangFool wrote: Sun Aug 30, 2020 8:12 am CASH for deflation.


Gold/Silver for hyperinflation.


<<We don't hold precious metals, and I'm not interested in starting now.>>

Then, your assumption is hyperinflation is not possible. I know that I know nothing. Hence, I keep some Gold/Silver as my hyperinflation insurance.

KlangFool
We hold TIPS.

feh,


And, how would that helps you in the case of hyperinflation? In my opinion, it does not.


KlangFool
How does gold help in hyperinflation?
Gold/Silver will go up to 10X to 30X during hyperinflation.


KlangFool
How do you know that?
Don't do something, just stand there!
KlangFool
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Re: time to invest cash reserves?

Post by KlangFool »

corn18 wrote: Sun Aug 30, 2020 10:13 am
KlangFool wrote: Sun Aug 30, 2020 10:12 am
corn18 wrote: Sun Aug 30, 2020 10:09 am
KlangFool wrote: Sun Aug 30, 2020 8:30 am
feh wrote: Sun Aug 30, 2020 8:19 am

We hold TIPS.

feh,


And, how would that helps you in the case of hyperinflation? In my opinion, it does not.


KlangFool
How does gold help in hyperinflation?
Gold/Silver will go up to 10X to 30X during hyperinflation.


KlangFool
How do you know that?
History of past hyperinflation.

KlangFool
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corn18
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Re: time to invest cash reserves?

Post by corn18 »

Please provide data. The data that I found does not support your hypothesis. If you're talking about late 70's inflation, you have one data point. I am struggling to find any hyperinflation in 2000-2010.

Image
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KlangFool
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Re: time to invest cash reserves?

Post by KlangFool »

corn18 wrote: Sun Aug 30, 2020 10:19 am Please provide data. The data that I found does not support your hypothesis. If you're talking about late 70's inflation, you have one data point. I am struggling to find any hyperinflation in 2000-2010.

Image
corn18,

In summary, you do not believe hyperinflation that occurred in other countries besides the USA is possible in the USA. I know that I know nothing. Hence, everything is possible.

KlangFool
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corn18
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Re: time to invest cash reserves?

Post by corn18 »

KlangFool wrote: Sun Aug 30, 2020 10:27 am
corn18 wrote: Sun Aug 30, 2020 10:19 am Please provide data. The data that I found does not support your hypothesis. If you're talking about late 70's inflation, you have one data point. I am struggling to find any hyperinflation in 2000-2010.

Image
corn18,

In summary, you do not believe hyperinflation that occurred in other countries besides the USA is possible in the USA. I know that I know nothing. Hence, everything is possible.

KlangFool
Fair enough.
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surfstar
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Re: time to invest cash reserves?

Post by surfstar »

Lump sum it all in now so the market will drop for the rest of us, so we can buy at a discount!
Thanks in advance. :beer
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Re: time to invest cash reserves?

Post by ruralavalon »

feh wrote: Sun Aug 30, 2020 6:58 am During the last 6 months of acrimony, we have not touched our portfolio. We rode the market down and back up.

The one thing we didn't do that we usually would: invest excess cash (that is, monies left over after maxing out our tax-advantaged accounts). So now, we have about $75K sitting in cash that we usually would not.

Time to put that money to work? Are the worst of the pandemic-induced gyrations over?
Go ahead and invest the excess cash now, in a taxable brokerage account using very tax-efficient stock index funds.

I don't know if gyrations are over, or not. It doesn't matter, cash will probably give you a negative real return net of inflation and taxes. Why stay with a negative real return?

Investing whenever you have money available to invest is the best policy in my opinion.
feh wrote: Sun Aug 30, 2020 7:23 amIf it makes any difference, we are FI, but still working part time (because I enjoy it).
My suggestion of the same, invest the cash. Your earned income makes it even more probable that cash will give a negative real return net of inflation and taxes.
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Re: time to invest cash reserves?

Post by gmaynardkrebs »

feh wrote: Sun Aug 30, 2020 6:58 am During the last 6 months of acrimony, we have not touched our portfolio. We rode the market down and back up.

The one thing we didn't do that we usually would: invest excess cash (that is, monies left over after maxing out our tax-advantaged accounts). So now, we have about $75K sitting in cash that we usually would not.

Time to put that money to work? Are the worst of the pandemic-induced gyrations over?
If you can save $75K in 6 months after maxing out you 401Ks, it doesn't matter what you do as far as I'm concerned.
sailaway
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Re: time to invest cash reserves?

Post by sailaway »

gmaynardkrebs wrote: Sun Aug 30, 2020 11:24 am
feh wrote: Sun Aug 30, 2020 6:58 am During the last 6 months of acrimony, we have not touched our portfolio. We rode the market down and back up.

The one thing we didn't do that we usually would: invest excess cash (that is, monies left over after maxing out our tax-advantaged accounts). So now, we have about $75K sitting in cash that we usually would not.

Time to put that money to work? Are the worst of the pandemic-induced gyrations over?
If you can save $75K in 6 months after maxing out you 401Ks, it doesn't matter what you do as far as I'm concerned.
?? Just because they have more money than most they shouldn't be good stewards of that money? :confused
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gmaynardkrebs
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Re: time to invest cash reserves?

Post by gmaynardkrebs »

sailaway wrote: Sun Aug 30, 2020 11:26 am
gmaynardkrebs wrote: Sun Aug 30, 2020 11:24 am
feh wrote: Sun Aug 30, 2020 6:58 am During the last 6 months of acrimony, we have not touched our portfolio. We rode the market down and back up.

The one thing we didn't do that we usually would: invest excess cash (that is, monies left over after maxing out our tax-advantaged accounts). So now, we have about $75K sitting in cash that we usually would not.

Time to put that money to work? Are the worst of the pandemic-induced gyrations over?
If you can save $75K in 6 months after maxing out you 401Ks, it doesn't matter what you do as far as I'm concerned.
?? Just because they have more money than most they shouldn't be good stewards of that money? :confused
Thanks for the question. I meant they probably have no need to take risk if they can maintain that savings rate, not that they should be cavalier about it. Fools and their money are you know what, but I rather doubt these folks are fools. :)
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AspireToRetire
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Re: time to invest cash reserves?

Post by AspireToRetire »

KlangFool wrote: Sun Aug 30, 2020 7:26 am
feh wrote: Sun Aug 30, 2020 7:23 am
KlangFool wrote: Sun Aug 30, 2020 7:20 am OP,

I am increasing my cash reserve if and when my portfolio goes up by X amount. And, I am taking a small portion of that cash to buy physical Gold/Silver. But, in my case, I am unemployed and I had reached my FI number. It is time to de-risk my portfolio.

I am updating my IPS with this new strategy.


KlangFool
If it makes any difference, we are FI, but still working part time (because I enjoy it).
Time to increase CASH and Gold/Silver.


It is a Risk versus Reward tradeoff. The gain is insignificant. The loss and threat of hyperinflation and deflation are significant.


FYI. My AA is 60/40 too.

KlangFoo;
KlangFool,

You mentioned you are 60/40; but also mentioned you hold cash, gold, and silver which doesn’t equal 60/40 then. Do you mind clarifying (If you’re comfortable sharing of course)?

AspireToRetire
KlangFool
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Re: time to invest cash reserves?

Post by KlangFool »

AspireToRetire wrote: Sun Aug 30, 2020 11:50 am
KlangFool wrote: Sun Aug 30, 2020 7:26 am
feh wrote: Sun Aug 30, 2020 7:23 am
KlangFool wrote: Sun Aug 30, 2020 7:20 am OP,

I am increasing my cash reserve if and when my portfolio goes up by X amount. And, I am taking a small portion of that cash to buy physical Gold/Silver. But, in my case, I am unemployed and I had reached my FI number. It is time to de-risk my portfolio.

I am updating my IPS with this new strategy.


KlangFool
If it makes any difference, we are FI, but still working part time (because I enjoy it).
Time to increase CASH and Gold/Silver.


It is a Risk versus Reward tradeoff. The gain is insignificant. The loss and threat of hyperinflation and deflation are significant.


FYI. My AA is 60/40 too.

KlangFoo;
KlangFool,

You mentioned you are 60/40; but also mentioned you hold cash, gold, and silver which doesn’t equal 60/40 then. Do you mind clarifying (If you’re comfortable sharing of course)?

AspireToRetire

AspireToRetire,


CASH = 2 years of expense in Emergency Fund


Gold/Silver = A few thousand in physical Gold/Silver as hyperinflation insurance.

They ( CASH + Gold/Silver) are not part of my 60/40 AA. I do not rebalance them.


KlangFool
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feh
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Re: time to invest cash reserves?

Post by feh »

gmaynardkrebs wrote: Sun Aug 30, 2020 11:24 am
feh wrote: Sun Aug 30, 2020 6:58 am During the last 6 months of acrimony, we have not touched our portfolio. We rode the market down and back up.

The one thing we didn't do that we usually would: invest excess cash (that is, monies left over after maxing out our tax-advantaged accounts). So now, we have about $75K sitting in cash that we usually would not.

Time to put that money to work? Are the worst of the pandemic-induced gyrations over?
If you can save $75K in 6 months after maxing out you 401Ks, it doesn't matter what you do as far as I'm concerned.
Didn't mean to give the impression our income is massive. A major portion of this sum is a once-a-year distribution from a business, which varies quite a bit.
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AspireToRetire
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Re: time to invest cash reserves?

Post by AspireToRetire »

Thanks KlangFool!
sailaway
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Re: time to invest cash reserves?

Post by sailaway »

feh wrote: Sun Aug 30, 2020 12:20 pm
gmaynardkrebs wrote: Sun Aug 30, 2020 11:24 am
feh wrote: Sun Aug 30, 2020 6:58 am During the last 6 months of acrimony, we have not touched our portfolio. We rode the market down and back up.

The one thing we didn't do that we usually would: invest excess cash (that is, monies left over after maxing out our tax-advantaged accounts). So now, we have about $75K sitting in cash that we usually would not.

Time to put that money to work? Are the worst of the pandemic-induced gyrations over?
If you can save $75K in 6 months after maxing out you 401Ks, it doesn't matter what you do as far as I'm concerned.
Didn't mean to give the impression our income is massive. A major portion of this sum is a once-a-year distribution from a business, which varies quite a bit.
Your income is still massive this year. Any time you can save more than the median income, your income is probably massive, but certainly when you can save the median income above and beyond tax advantaged accounts.
Ed 2
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Re: time to invest cash reserves?

Post by Ed 2 »

feh wrote: Sun Aug 30, 2020 6:58 am During the last 6 months of acrimony, we have not touched our portfolio. We rode the market down and back up.

The one thing we didn't do that we usually would: invest excess cash (that is, monies left over after maxing out our tax-advantaged accounts). So now, we have about $75K sitting in cash that we usually would not.

Time to put that money to work? Are the worst of the pandemic-induced gyrations over?
How old are you? Your job security situation? Your risk tolerance? Your stocks bonds allocation? Hard to answer if we don’t know anything. I never had big cash pile like this on any times. I consider if I cash enough to pay my bills ONLY. I would never make my cash seating and doing nothing.
"The fund industry doesn't have a lot of heroes, but he (Bogle) is one of them," Russ Kinnel
Topic Author
feh
Posts: 1392
Joined: Sat Dec 15, 2012 11:39 am

Re: time to invest cash reserves?

Post by feh »

Ed 2 wrote: Sun Aug 30, 2020 12:51 pm
feh wrote: Sun Aug 30, 2020 6:58 am During the last 6 months of acrimony, we have not touched our portfolio. We rode the market down and back up.

The one thing we didn't do that we usually would: invest excess cash (that is, monies left over after maxing out our tax-advantaged accounts). So now, we have about $75K sitting in cash that we usually would not.

Time to put that money to work? Are the worst of the pandemic-induced gyrations over?
How old are you? Your job security situation? Your risk tolerance? Your stocks bonds allocation? Hard to answer if we don’t know anything. I never had big cash pile like this on any times. I consider if I cash enough to pay my bills ONLY. I would never make my cash seating and doing nothing.
We generally keep around $20K in cash (true cash, as in a savings account). That number is currently $110K.
Mode32
Posts: 196
Joined: Mon Mar 02, 2020 1:24 pm

Re: time to invest cash reserves?

Post by Mode32 »

ruralavalon wrote: Sun Aug 30, 2020 11:05 am
feh wrote: Sun Aug 30, 2020 6:58 am During the last 6 months of acrimony, we have not touched our portfolio. We rode the market down and back up.

The one thing we didn't do that we usually would: invest excess cash (that is, monies left over after maxing out our tax-advantaged accounts). So now, we have about $75K sitting in cash that we usually would not.

Time to put that money to work? Are the worst of the pandemic-induced gyrations over?
Go ahead and invest the excess cash now, in a taxable brokerage account using very tax-efficient stock index funds.

I don't know if gyrations are over, or not. It doesn't matter, cash will probably give you a negative real return net of inflation and taxes. Why stay with a negative real return?

Investing whenever you have money available to invest is the best policy in my opinion.
feh wrote: Sun Aug 30, 2020 7:23 amIf it makes any difference, we are FI, but still working part time (because I enjoy it).
My suggestion of the same, invest the cash. Your earned income makes it even more probable that cash will give a negative real return net of inflation and taxes.
+1
lostdog
Posts: 3316
Joined: Thu Feb 04, 2016 2:15 pm

Re: time to invest cash reserves?

Post by lostdog »

KlangFool wrote: Sun Aug 30, 2020 7:20 am OP,

I am increasing my cash reserve if and when my portfolio goes up by X amount. And, I am taking a small portion of that cash to buy physical Gold/Silver. But, in my case, I am unemployed and I had reached my FI number. It is time to de-risk my portfolio.

I am updating my IPS with this new strategy.


KlangFool
25x expenses for your FI number?
KlangFool
Posts: 18184
Joined: Sat Oct 11, 2008 12:35 pm

Re: time to invest cash reserves?

Post by KlangFool »

lostdog wrote: Sun Aug 30, 2020 4:36 pm
KlangFool wrote: Sun Aug 30, 2020 7:20 am OP,

I am increasing my cash reserve if and when my portfolio goes up by X amount. And, I am taking a small portion of that cash to buy physical Gold/Silver. But, in my case, I am unemployed and I had reached my FI number. It is time to de-risk my portfolio.

I am updating my IPS with this new strategy.


KlangFool
25x expenses for your FI number?
Yes.
KlangFool
lostdog
Posts: 3316
Joined: Thu Feb 04, 2016 2:15 pm

Re: time to invest cash reserves?

Post by lostdog »

KlangFool wrote: Sun Aug 30, 2020 4:40 pm
lostdog wrote: Sun Aug 30, 2020 4:36 pm
KlangFool wrote: Sun Aug 30, 2020 7:20 am OP,

I am increasing my cash reserve if and when my portfolio goes up by X amount. And, I am taking a small portion of that cash to buy physical Gold/Silver. But, in my case, I am unemployed and I had reached my FI number. It is time to de-risk my portfolio.

I am updating my IPS with this new strategy.


KlangFool
25x expenses for your FI number?
Yes.
KlangFool
Grats. I'm happy for you. Everything worked out.
anoop
Posts: 1834
Joined: Tue Mar 04, 2014 1:33 am

Re: time to invest cash reserves?

Post by anoop »

KlangFool wrote: Sun Aug 30, 2020 12:07 pm
AspireToRetire wrote: Sun Aug 30, 2020 11:50 am
KlangFool wrote: Sun Aug 30, 2020 7:26 am
feh wrote: Sun Aug 30, 2020 7:23 am
KlangFool wrote: Sun Aug 30, 2020 7:20 am OP,

I am increasing my cash reserve if and when my portfolio goes up by X amount. And, I am taking a small portion of that cash to buy physical Gold/Silver. But, in my case, I am unemployed and I had reached my FI number. It is time to de-risk my portfolio.

I am updating my IPS with this new strategy.


KlangFool
If it makes any difference, we are FI, but still working part time (because I enjoy it).
Time to increase CASH and Gold/Silver.


It is a Risk versus Reward tradeoff. The gain is insignificant. The loss and threat of hyperinflation and deflation are significant.


FYI. My AA is 60/40 too.

KlangFoo;
KlangFool,

You mentioned you are 60/40; but also mentioned you hold cash, gold, and silver which doesn’t equal 60/40 then. Do you mind clarifying (If you’re comfortable sharing of course)?

AspireToRetire

AspireToRetire,


CASH = 2 years of expense in Emergency Fund


Gold/Silver = A few thousand in physical Gold/Silver as hyperinflation insurance.

They ( CASH + Gold/Silver) are not part of my 60/40 AA. I do not rebalance them.


KlangFool
Which money is used for day-to-day expenses now that you are retired? Are you pulling money out from the portfolio each month? Or are you spending down the EF and then replenishing it periodically by selling stocks/bonds?
Ed 2
Posts: 1668
Joined: Sat May 15, 2010 9:34 am

Re: time to invest cash reserves?

Post by Ed 2 »

feh wrote: Sun Aug 30, 2020 3:56 pm
Ed 2 wrote: Sun Aug 30, 2020 12:51 pm
feh wrote: Sun Aug 30, 2020 6:58 am During the last 6 months of acrimony, we have not touched our portfolio. We rode the market down and back up.

The one thing we didn't do that we usually would: invest excess cash (that is, monies left over after maxing out our tax-advantaged accounts). So now, we have about $75K sitting in cash that we usually would not.

Time to put that money to work? Are the worst of the pandemic-induced gyrations over?
How old are you? Your job security situation? Your risk tolerance? Your stocks bonds allocation? Hard to answer if we don’t know anything. I never had big cash pile like this on any times. I consider if I cash enough to pay my bills ONLY. I would never make my cash seating and doing nothing.
We generally keep around $20K in cash (true cash, as in a savings account). That number is currently $110K.
If you think 110K in cash is excessive for you than this is the answer. Since you didn’t give us your basic information it is up to you . Remember W Buffett today is 90. He still invest like no one else. Many would say “ he can afford to loose, bluh bluh bluh... “. Anyways look at your timeframe and ask yourself “why”
"The fund industry doesn't have a lot of heroes, but he (Bogle) is one of them," Russ Kinnel
Wanderingwheelz
Posts: 636
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Re: time to invest cash reserves?

Post by Wanderingwheelz »

feh wrote: Sun Aug 30, 2020 7:19 am
dogagility wrote: Sun Aug 30, 2020 7:13 am
feh wrote: Sun Aug 30, 2020 6:58 am During the last 6 months of acrimony, we have not touched our portfolio. We rode the market down and back up.

The one thing we didn't do that we usually would: invest excess cash (that is, monies left over after maxing out our tax-advantaged accounts). So now, we have about $75K sitting in cash that we usually would not.

Time to put that money to work? Are the worst of the pandemic-induced gyrations over?
What do you intend to purchase with this cash?

Is that spend going to be 5 years or more in the future. If so, I would invest it accordingly. If you are a conservative investor, invest less of this cash in a stock index fund(s).

If that spend is less than 5 years in the future, then keep it in some sort of fixed income vehicle (or cash).

Market timing is a fool's errand.
The money would be invested according to our AA (60/40).

For all those chastising not to time the market: I'm familiar w/ the mantra. Given the unprecedented situation of the pandemic and that this represents about 2% of our portfolio I'm not feeling guilty about it.
It’s 2% if your portfolio. Just put it to work according to your asset allocation. Why the big deal?
User avatar
HomerJ
Posts: 15314
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Re: time to invest cash reserves?

Post by HomerJ »

KlangFool wrote: Sun Aug 30, 2020 10:12 am
corn18 wrote: Sun Aug 30, 2020 10:09 am
KlangFool wrote: Sun Aug 30, 2020 8:30 am
feh wrote: Sun Aug 30, 2020 8:19 am
KlangFool wrote: Sun Aug 30, 2020 8:12 am CASH for deflation.


Gold/Silver for hyperinflation.


<<We don't hold precious metals, and I'm not interested in starting now.>>

Then, your assumption is hyperinflation is not possible. I know that I know nothing. Hence, I keep some Gold/Silver as my hyperinflation insurance.

KlangFool
We hold TIPS.

feh,


And, how would that helps you in the case of hyperinflation? In my opinion, it does not.


KlangFool
How does gold help in hyperinflation?
Gold/Silver will go up to 10X to 30X during hyperinflation.


KlangFool
If there's hyper-inflation, then gold/silver will hold steady. Well, it will probably go up a decent amount as people gravitate to it.

But it won't go up 10x-30x in REAL terms. It might go up 30x in price, but hyper-inflation will eat most of that away, and you'll be back to even with it.

So how much you have in gold/silver? 5%? 10%? Need a decent amount to really hedge against the rest of your portfolio becoming mostly worthless.

Or is the plan to have enough to survive a few years (and/or get out of the country) and start all over?
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
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gmaynardkrebs
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Re: time to invest cash reserves?

Post by gmaynardkrebs »

feh wrote: Sun Aug 30, 2020 7:19 am
dogagility wrote: Sun Aug 30, 2020 7:13 am
feh wrote: Sun Aug 30, 2020 6:58 am During the last 6 months of acrimony, we have not touched our portfolio. We rode the market down and back up.

The one thing we didn't do that we usually would: invest excess cash (that is, monies left over after maxing out our tax-advantaged accounts). So now, we have about $75K sitting in cash that we usually would not.

Time to put that money to work? Are the worst of the pandemic-induced gyrations over?
What do you intend to purchase with this cash?

Is that spend going to be 5 years or more in the future. If so, I would invest it accordingly. If you are a conservative investor, invest less of this cash in a stock index fund(s).

If that spend is less than 5 years in the future, then keep it in some sort of fixed income vehicle (or cash).

Market timing is a fool's errand.
The money would be invested according to our AA (60/40).

For all those chastising not to time the market: I'm familiar w/ the mantra. Given the unprecedented situation of the pandemic and that this represents about 2% of our portfolio I'm not feeling guilty about it.
If you’re more comfortable with slightly less than your previous 60/40, it’s probably not going to make much difference anyway. Things are pretty unsettled out in the real world these days.
KlangFool
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Re: time to invest cash reserves?

Post by KlangFool »

HomerJ wrote: Sun Aug 30, 2020 5:06 pm

If there's hyper-inflation, then gold/silver will hold steady. Well, it will probably go up a decent amount as people gravitate to it.

But it won't go up 10x-30x in REAL terms. It might go up 30x in price, but hyper-inflation will eat most of that away, and you'll be back to even with it.

So how much you have in gold/silver? 5%? 10%? Need a decent amount to really hedge against the rest of your portfolio becoming mostly worthless.

Or is the plan to have enough to survive a few years (and/or get out of the country) and start all over?

HomerJ,


1) If there is hyperinflation, folks with Gold/Silver will be in better shape than those who don't.


2) As to how much Gold/Silver that someone should have, that is up to each individual to decide.


KlangFool
KlangFool
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Re: time to invest cash reserves?

Post by KlangFool »

anoop wrote: Sun Aug 30, 2020 4:49 pm
KlangFool wrote: Sun Aug 30, 2020 12:07 pm
AspireToRetire wrote: Sun Aug 30, 2020 11:50 am
KlangFool wrote: Sun Aug 30, 2020 7:26 am
feh wrote: Sun Aug 30, 2020 7:23 am

If it makes any difference, we are FI, but still working part time (because I enjoy it).
Time to increase CASH and Gold/Silver.


It is a Risk versus Reward tradeoff. The gain is insignificant. The loss and threat of hyperinflation and deflation are significant.


FYI. My AA is 60/40 too.

KlangFoo;
KlangFool,

You mentioned you are 60/40; but also mentioned you hold cash, gold, and silver which doesn’t equal 60/40 then. Do you mind clarifying (If you’re comfortable sharing of course)?

AspireToRetire

AspireToRetire,


CASH = 2 years of expense in Emergency Fund


Gold/Silver = A few thousand in physical Gold/Silver as hyperinflation insurance.

They ( CASH + Gold/Silver) are not part of my 60/40 AA. I do not rebalance them.


KlangFool
Which money is used for day-to-day expenses now that you are retired? Are you pulling money out from the portfolio each month? Or are you spending down the EF and then replenishing it periodically by selling stocks/bonds?

anoop,

The latter.

KlangFool
KlangFool
Posts: 18184
Joined: Sat Oct 11, 2008 12:35 pm

Re: time to invest cash reserves?

Post by KlangFool »

lostdog wrote: Sun Aug 30, 2020 4:43 pm
KlangFool wrote: Sun Aug 30, 2020 4:40 pm
lostdog wrote: Sun Aug 30, 2020 4:36 pm
KlangFool wrote: Sun Aug 30, 2020 7:20 am OP,

I am increasing my cash reserve if and when my portfolio goes up by X amount. And, I am taking a small portion of that cash to buy physical Gold/Silver. But, in my case, I am unemployed and I had reached my FI number. It is time to de-risk my portfolio.

I am updating my IPS with this new strategy.


KlangFool
25x expenses for your FI number?
Yes.
KlangFool
Grats. I'm happy for you. Everything worked out.

Thanks.


KlangFool
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