What % cash in portfolio?

[Yesterdaysnews]

Now that trash is no longer trash - what percentage of the portfolio are people holding in cash or cash equivalents?

I'm starting to think 15% might be reasonable if 20+ years from retirement, since real yield can be had.

[secondopinion]

Now that trash is no longer trash - what percentage of the portfolio are people holding in cash or cash equivalents?

I'm starting to think 15% might be reasonable if 20+ years from retirement, since real yield can be had.

Aside of funds already reserved for other things, 1%. Before 2022, 20%. Speculative reason: too many people talking about holding cash instead.

[climber2020]

I keep 1%. It’s enough to help me feel better and has no significant effect on my overall portfolio performance.

[mega317]

I don't go for market timing. Even the cash "market". My goals and horizon haven't changed. And moving, for example, from intermediate term bonds to cash now, and then presumably back again when cash rates falls, will end up as selling low and buying high. I am making no changes based on "the current environment" or "today's conditions" or any of the other ways people usually phrase it in their posts.

[pizzy]

Bonds/cash is currently 7%, but it is all cash.

[steadyosmosis]

Now that trash is no longer trash - what percentage of the portfolio are people holding in cash or cash equivalents?

I'm starting to think 15% might be reasonable if 20+ years from retirement, since real yield can be had.

I keep less than 0.5% in cash.
When I need some to spend, I just sell a few shares of VTI in taxable.
Early-retired, 60/40 AA.
Roth IRA, HSA, and taxable accounts are all 100% equities.
100% of fixed income is in tax-deferred accounts, plus some spillover equities.

[balbrec2]

If you're not retired, none. If you are retired, 1-3 years worth according to your comfort level.

[goblue100]

Now that trash is no longer trash - what percentage of the portfolio are people holding in cash or cash equivalents?

I'm starting to think 15% might be reasonable if 20+ years from retirement, since real yield can be had.

If 20+ years from retirement I wouldn't have any cash. At 1 year or less from retirement, I had about 8% in cash, which has ended up working pretty well. Earning 4% on cash with 6.5% inflation is worse than earning 0 on cash with 2% inflation, so the fact yield is available doesn't make cash a great investment.

[dbr]

We seem to end up between 2% and 4% depending on how cash flows shake out at any time. With some effort it could be less but we don't bother.

It is all convenience of cash flow management, input-output, working reserves. As an asset allocation it would theoretically be zero.

[nguy44]

I am retired, and I likely keep a higher percentage in cash as I am more conservative with investments. I like to keep several years of cash to cover planned expenses not covered by my pension or wife's SS (our current fixed income). I maintain my cash level without regard to what the market or interest rates are doing. Right now our cash holdings are 11% of our total portfolio.

[cerequio]

I just checked and we have 12% in cash. We aren't sure about our retirement date yet, but are in our early 40s now.

[retired@50]

Now that trash is no longer trash - what percentage of the portfolio are people holding in cash or cash equivalents?

I'm starting to think 15% might be reasonable if 20+ years from retirement, since real yield can be had.

While the yield is certainly a positive number, it's not a "real" yield because it's still lagging inflation by a percent or two.

I hold less than 2% in cash.

Regards,

[JimmyD]

We're 40 and we seem to keep around 5% cash. I'd like for that to be less, but it counts our emergency fund and checking account...and the small slices of cash that are within equity index funds.

I expect this percentage to slowly go down as we continue to build our investments in other asset classes.

[btq96r]

I look at cash as a fixed value instead of percentages. For me, that means my checking and savings can survive a month if payroll is screwed up, and I have six months of take home pay as an emergency fund. I've also added to that recently with enough set aside for a new vehicle purchase since my current one hit 20yrs and 115k miles last year. After that, it's all equities for the moment.

[GRP]

25% cash

[dbr]

I look at cash as a fixed value instead of percentages. For me, that means my checking and savings can survive a month if payroll is screwed up, and I have six months of take home pay as an emergency fund. I've also added to that recently with enough set aside for a new vehicle purchase since my current one hit 20yrs and 115k miles last year. After that, it's all equities for the moment.

Right. The dynamics of how cash works for us results in a tendency to value that has no relationship to portfolio size or asset allocation. It is also a result of process rather than policy hence not to be confused with keeping x fraction of spending in cash. Contingencies and plans as you mention do affect cash held.

[dogagility]

Likely going to be retired within 4 years. We hold about 2 month's worth of expenses in a money market account. Everything else is invested in bonds or equities.

[Billyboy]

3% Cash.

[aristotelian]

I have about 2.5% in I Bonds and about 1% in short term bonds. Not really changing anything long term. I may sell some of the I Bonds when the rates drop after May.

[NiceUnparticularMan]

We seem to end up between 2% and 4% depending on how cash flows shake out at any time. With some effort it could be less but we don't bother.

It is all convenience of cash flow management, input-output, working reserves. As an asset allocation it would theoretically be zero.

We're very similar. Our target fixed-income allocation for long-term savings is all stable value, cash balance pension, and TIPS, but we have some amounts in actual cash-type balances for various cash flow reasons.

I actually have no idea what that is as a percentage of our financial accounts at the moment, other than knowing it isn't large. The only time it is remotely visible to me is when we do our annual rebalancing, when we make a point of identifying any cash that can safely be dedicated to long-term savings (and even then, there is other cash out there--I am just not allowed to consider it as part of our long-term savings).

That cash marked for investment as long-term savings is then briefly visible to me on the "before" version of my spreadsheet, but then reallocated to something else per the "after" allocation plan on my spreadsheet, and then I execute on those transactions.

And then it is usually going to be another year before I do all that again.

[NiceUnparticularMan]

and the small slices of cash that are within equity index funds.

I used to try to figure that out during our annual rebalancing, then gave up because it was too much work.

And no, it isn't THAT much work, but I am super lazy about that sort of thing. And proud of it.

[rule of law guy]

I read all of Taleb's books, and have become a convert to the survival mode of portfolio positioning...and it helps now that cash is above 4% yield. it all depends on your life situation and investing objectives, no % is right for everyone

[Rocky Mtn Man]

I don't go for market timing. Even the cash "market". My goals and horizon haven't changed. And moving, for example, from intermediate term bonds to cash now, and then presumably back again when cash rates falls, will end up as selling low and buying high. I am making no changes based on "the current environment" or "today's conditions" or any of the other ways people usually phrase it in their posts.

Exactly. Sell VBILX today at $10.30. Buy it back in 2 years at $12.30. Sigh....

[faanger101]

Now that trash is no longer trash - what percentage of the portfolio are people holding in cash or cash equivalents?

I'm starting to think 15% might be reasonable if 20+ years from retirement, since real yield can be had.

2-3% plus 7% in ibonds

[RetirementClass2021]

Around $2,000 in case family or friends need to borrow a few dollars.

[Raspberry-503]

5-8 years away from retirement here.
I keep 1 month's living expenses in my checking account (I age my money one month) mainly so that I don't worry about the occasional extra expense or balancing my checkbook
I have another $10K in a HYSA as a "first layer" emergency fund, but last time I used it was over 5 years ago for some home improvement expenses
I have 6-8 months of living expenses in iBonds as my main emergency fund, I consider those cash because they are liquid (older than 1 year) but also part of the fixed income part of my AA. That's about 5% of my portfolio, and yes if I lost my job it would lower the fixed income part of my AA

[Wiggums]

We are retired and have 3.32% cash

[Thranduil]

If you're not retired, none. If you are retired, 1-3 years worth according to your comfort level.

359 days into my retirement, I now better understand the incredible importance of your "comfort level" point. You have to be able to sleep at night. The amount of cash my wife and I have decided to hold, and to not put into our 4 fund 55/45 portfolio, is all about our comfort level, not financial calculations. We just sat down one evening and decided -- how does 1 year sound? Nope, not enough. 18 months? Nope, not enough. We ended up deciding to hold 3 years of expenses in cash. It has turned out to be financially a good decision, with our Fidelity money market paying 4+%, but the decision was about sleeping well at night, not financial issues.

[Thranduil]

If you're not retired, none. If you are retired, 1-3 years worth according to your comfort level.

359 days into my retirement, I now better understand the incredible importance of your "comfort level" point. You have to be able to sleep at night. The amount of cash my wife and I have decided to hold, and to not put into our 4 fund 55/45 portfolio, is all about our comfort level, not financial calculations. We just sat down one evening and decided -- how does 1 year sound? Nope, not enough. 18 months? Nope, not enough. We ended up deciding to hold 3 years of expenses in cash. It has turned out to be financially a good decision, with our Fidelity money market paying 4+%, but the decision was about sleeping well at night, not financial issues.

[bmcgin]

97% at the moment. And actually all last year.

[Munir]

Retired in distribution stage. Portfolio all in IRA with cash (VUSXX) at 49%

[jnk715]

I keep 1%. It’s enough to help me feel better and has no significant effect on my overall portfolio performance.

I'm trying to understand your postion as a cash heavy guy. I have about $350k in CD's, treasuries, and ibonds. My invested assets are all in equities which equate to about 190k in a 401k and 65k in a Roth IRA. I'm 40. Are most of you saying you have the majority of your money in a stock/bond portfolio? What if you need to make a big purchase i.e. house, car, etc?

[Leif]

I don't think % of portfolio in cash is a very useful metric. In addition, there is not wide agreement here on what is considered "cash".

More useful is how long will your "cash" (for me that means immediately available, no potential capital loss- money market, checking, savings) last. Today that is 9 months for me (cash/expected net monthly expenses). Net expenses here means less income.

[JimmyD]

and the small slices of cash that are within equity index funds.

I used to try to figure that out during our annual rebalancing, then gave up because it was too much work.

And no, it isn't THAT much work, but I am super lazy about that sort of thing. And proud of it.

I'm with you. As they say, that amount of cash is just a rounding error. Better things to do with my time. Like, nothing

[KlangFool]

Now that trash is no longer trash - what percentage of the portfolio are people holding in cash or cash equivalents?

I'm starting to think 15% might be reasonable if 20+ years from retirement, since real yield can be had.

I don't hold cash in my portfolio. Cash is my emergency fund. I don't rebalance away my cash.

KlangFool

[houseofnine]

Since retirement is imminent and we’re trying to maximize drawdown flexibility, 7-8% or 2-3 years expenses.

[jebmke]

< 1%

[Doctor Rhythm]

I keep 1%. It’s enough to help me feel better and has no significant effect on my overall portfolio performance.

I'm trying to understand your postion as a cash heavy guy. I have about $350k in CD's, treasuries, and ibonds. My invested assets are all in equities which equate to about 190k in a 401k and 65k in a Roth IRA. I'm 40. Are most of you saying you have the majority of your money in a stock/bond portfolio? What if you need to make a big purchase i.e. house, car, etc?

Not the person you asked, but I think the numbers are more meaningful if you know the portfolio size.

1% cash on (say) $5M is enough to buy a new car or cover perhaps 6-12 months of living expenses. There’s little risk that person will need to sell stocks or bonds in an emergency (which is how one would cover a large purchase). In contrast, 1% on $300K is likely not enough to cover one month of expenses, and would be considered a risky choice.

[tennisplyr]

We keep ~4-5% in cash...retired 11 years.

[cbs2002]

About 4% in true no-risk cash, which to me means checking, money market and CD accounts. Bond holdings are not cash.

[WoodSpinner]

OP,

FWIW, I keep the current year’s anticipated expenses in cash.

I keep the next 10 years of expenses in a quasi LMP/Bucket approach.



Been retired 5 years now and have been very comfortable through the last 3 Bear-markets.

WoodSpinner

[muel87]

I keep the next 10 years of expenses in a quasi LMP/Bucket approach.

How is VGIT part of growth and low risk?

[Candor]

20% in CD's and I bonds. Enough to get me to age 60 or so. Currently 1.5 years into relatively early retirement. No plans to refill the cash coffer once depleted.

[bh1]

Now that trash is no longer trash - what percentage of the portfolio are people holding in cash or cash equivalents?

I'm starting to think 15% might be reasonable if 20+ years from retirement, since real yield can be had.

I don't hold cash in my portfolio. Cash is my emergency fund. I don't rebalance away my cash.

KlangFool

I am confused why anybody would do anything else. Money not in the market is not earning money, so all portfolio funds are invested at all times. Right?

[brad.clarkston]

About 10% in a T-Bill ladder that I wouldn't sweat selling early which is separate from my TBM funds.
Another 1 years worth of expenses in a HYCA but I do not count that as part of port.

[ruralavalon]

Now that trash is no longer trash - what percentage of the portfolio are people holding in cash or cash equivalents?

I'm starting to think 15% might be reasonable if 20+ years from retirement, since real yield can be had.

None.

Age 77, retired, no pension or annuity.

I have no cash in my portfolio. The only cash I have is whatever happens to be in my checking account at the moment.

[steadyosmosis]

I keep 1%. It’s enough to help me feel better and has no significant effect on my overall portfolio performance.

I'm trying to understand your postion as a cash heavy guy. I have about $350k in CD's, treasuries, and ibonds. My invested assets are all in equities which equate to about 190k in a 401k and 65k in a Roth IRA. I'm 40.
Are most of you saying you have the majority of your money in a stock/bond portfolio? Yes.
What if you need to make a big purchase i.e. house, car, etc? I already own a house (plan to stay here), and my last car purchase was $13k, so I sold a few shares of VTI in my taxable account.

Answers above in blue.

[Marseille07]

I don't hold cash in my portfolio. Cash is my emergency fund. I don't rebalance away my cash.

KlangFool

If you maintain 120K at all times, you are rebalancing it. It's just that your allocation target is fixed, rather than a percentage.

[Broken Man 1999]

I hold enough cash to pay all my bills that are due for the month. My distribution from my TIRA my bills due the first portion of the month, and my SS benefit covers the bills due for the rest of the month.

We held very little cash during our working days and I hold very little now. No idea what cash DW holds, though I don't think she would be stashing away cash.

Both DW and I have assets that can easily be exchanged for cash quickly, DDs can lend us money, or we could possibly use a credit card for an emergency expense. Thing is, it takes very little time to pull from our tax-deferred accounts and simply pay an emergency expense like any other monthly expense.

Holding cash would add another asset in our retirement portfolio, and I prefer fewer assets to manage to more assets to manage.

Some prefer holding cash for some number of years expected expenses as a defense against a downturn of the market, and/or simply to sleep well at night. Whatever works for them, good.

I do not stress about selling in a down market for a couple of reasons: given the very long holding period of our assets, a sale might be lower than the previous highest price, but it would be much higher than we paid for the large majority of shares, with the exception of shares bought via reinvesting dividends. Also I don't distribute until I absolutely need the dollars to pay an expense due NOW.

Broken Man 1999

[KlangFool]

I don't hold cash in my portfolio. Cash is my emergency fund. I don't rebalance away my cash.

KlangFool

If you maintain 120K at all times, you are rebalancing it. It's just that your allocation target is fixed, rather than a percentage.

A) I am not maintaining 120K all the time.

B) It is not part of my portfolio. Hence, there is no rebalancing.

KlangFool