How much cash do you hold in your investment account?

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Random Musings
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Re: How much cash do you hold in your investment account?

Post by Random Musings »

I have around 10% in the US Treasury fund, reduces my overall bond duration (the nominal bond portion). I will use a little bit of that to buy my I-Bonds at Treasury direct sometime in January.

Typically, I have far less cash, but the ultra low interest rate environment has made me lower my duration.

RM
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BolderBoy
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Re: How much cash do you hold in your investment account?

Post by BolderBoy »

Lambeau wrote: Thu Dec 31, 2020 2:40 pm40% of my portfolio is in Treasury MM.
Why?
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grabiner
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Re: How much cash do you hold in your investment account?

Post by grabiner »

9-5 Suited wrote: Sat Jan 02, 2021 3:19 pm
grabiner wrote: Thu Dec 31, 2020 9:07 pm I like to buy ETFs in round lots of 100 shares. Therefore, in my taxable account, if my next purchase will be an ETF, then I accumulate cash, either in my bank account or my money-market fund, until I have enough to buy 100 shares of the ETF.

If my next purchase will be a mutual fund, I usually wait to have a few thousand dollars to invest.

In my Roth IRA, I invest every possible dollar, buying an odd lot of an ETF if necessary.

The difference is that cash in my Roth IRA will sit there for the entire year, as I reinvest all dividends and only add money in January. In contrast, if I leave cash in my taxable account, it will likely get invested within a few months, as I accumulate more unspent salary and take dividends in cash.
Why do you find the advantage of round 100 share lots outweighs the opportunity cost of holding cash for longer periods? Haven’t heard of this before but your reasoning is always sound and interesting!
If you place a limit order to buy or sell 100 shares and it doesn't fill immediately, it will be displayed in the quotes, which makes it more likely that another trader will accept it. An order for less than 100 shares will not be displayed in the simple market quote that most brokers offer; you need Level II quotes unless it is on one of the exchanges that offers free view of the order book (http://www.cboe.com/us/equities/)

There is also the value of my time. It takes a non-trivial amount of time to trade ETFs, particularly if they trade at higher spreads and thus you may need to place orders inside the spread or wait for a large spread to narrow. (This wouldn't be as much of an issue with something like VTI, which you can just buy with a market order because it trades at a one-cent spread. But the ETF I trade most often is VSS, Vanguard FTSE All-World Ex-US Small-Cap, which sometimes has a 1% spread, particularly near the market open.)

Finally, as I mentioned above, the opportunity cost is much less in the taxable account. I have $7000 of cash in my Roth IRA now, and won't add any more cash until next year. Thus, if I spend only $5000 buying an ETF, the other $2000 will sit unused for a year. In contrast, if I have $2000 in cash in my brokerage account and want to spend $5000 when I next buy an ETF, I only have to wait until I have another $3000 in dividends or savings, which won't keep it out of the market for very long.
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Lambeau
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Re: How much cash do you hold in your investment account?

Post by Lambeau »

BolderBoy wrote: Sat Jan 02, 2021 10:43 pm
Lambeau wrote: Thu Dec 31, 2020 2:40 pm40% of my portfolio is in Treasury MM.
Why?
Age 70
20% SP Index
40% I- Bonds
40% Treasury MM

All the risk I need.
GoneOnTilt
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Re: How much cash do you hold in your investment account?

Post by GoneOnTilt »

abuss368 wrote: Fri Jan 01, 2021 2:07 pm
bck63 wrote: Fri Jan 01, 2021 11:30 am
abuss368 wrote: Thu Dec 31, 2020 10:12 pm I don’t have a specifics allocation to cash. I don’t even have a separate emergency fund account anymore.

I simply have one cash account. That is it. We build it each pay period. No limits. No rules. Just plain old cash.

There when we need it.

Tony
This is such a sensible approach. Thanks to you boglehead folks I have learned that I really don't need an emergency fun, given my taxable account investments. I do keep about 3% cash and will likely increase. But I have plenty of liquidity in stock and bond funds.
Simple works!
Tony
Was just looking at this thread again. I am now up to about 5.5% of my portfolio in cash. Four years or so to go until retirement and may be up to 10% by the time I retire. I might not have a rational explanation for that other than a feeling of comfort.
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Re: How much cash do you hold in your investment account?

Post by mmcmonster »

I like fairly strict rules regarding this, so I know what I'm doing and not get emotional about it.

I'm currently in my accumulation phase. I keep zero cash in my investment accounts. I keep at least $20k in my bank account. Anything over 20k gets invested at the beginning of each month.

When I enter retirement, my plan is to keep 1-2 years of spending money in my bank account. If I have less than 1 year's worth, I withdraw money from investments. If I have more than 2 years worth, I invest it using my usual allocation model. When I am in retirement, I plan to turn off DRIP, so my bank account will get somewhat replenished each month with dividends from the investments in my taxable account.
pascalwager
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Re: How much cash do you hold in your investment account?

Post by pascalwager »

My maximum cash would be 99 cents in settlement funds. Anything larger gets used to buy mutual fund fractional shares. I have ten cents in one settlement fund, but there's a $1 minimum to buy mutual fund shares. I dislike seeing un-invested loose change in my settlement accounts.

(I do have a considerable cash buffer in my local bank checking account mainly to minimize any chance of overdrafts.)
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Re: How much cash do you hold in your investment account?

Post by 7eight9 »

Around 40%. Add in CDs, ibonds, MYGAs, stable value fund, and bank accounts and that number is closer to 84%. Every year we say that this is going to be the year when we actually do something with our cash. But the easiest thing to do is to do nothing when you don't know what to do. So here we are at nearly the midpoint of 2021 and still sitting on cash.
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Re: How much cash do you hold in your investment account?

Post by Robot Monster »

7eight9 wrote: Fri Jun 04, 2021 8:48 pm Around 40%. Add in CDs, ibonds, MYGAs, stable value fund, and bank accounts and that number is closer to 84%. Every year we say that this is going to be the year when we actually do something with our cash. But the easiest thing to do is to do nothing when you don't know what to do. So here we are at nearly the midpoint of 2021 and still sitting on cash.
If you don't know what to do, why not reach out to the fine people on this forum to help you develop a plan? Is it that you perhaps know what they'd recommend, and would feel reluctant to follow their advice? Are you, perhaps, disinclined to invest in the market?
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Explorer
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Re: How much cash do you hold in your investment account?

Post by Explorer »

7eight9 wrote: Fri Jun 04, 2021 8:48 pm Around 40%. Add in CDs, ibonds, MYGAs, stable value fund, and bank accounts and that number is closer to 84%. Every year we say that this is going to be the year when we actually do something with our cash. But the easiest thing to do is to do nothing when you don't know what to do. So here we are at nearly the midpoint of 2021 and still sitting on cash.
This is a perfectly fine approach ... if it allows you to sleep well at night.
pascalwager
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Re: How much cash do you hold in your investment account?

Post by pascalwager »

7eight9 wrote: Fri Jun 04, 2021 8:48 pm Around 40%. Add in CDs, ibonds, MYGAs, stable value fund, and bank accounts and that number is closer to 84%. Every year we say that this is going to be the year when we actually do something with our cash. But the easiest thing to do is to do nothing when you don't know what to do. So here we are at nearly the midpoint of 2021 and still sitting on cash.
You've surely done the math and found that it works for your ages, portfolio size, and SS check(s) for inflation.
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gwe67
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Re: How much cash do you hold in your investment account?

Post by gwe67 »

pascalwager wrote: Sat Jun 05, 2021 11:17 am
7eight9 wrote: Fri Jun 04, 2021 8:48 pm Around 40%. Add in CDs, ibonds, MYGAs, stable value fund, and bank accounts and that number is closer to 84%. Every year we say that this is going to be the year when we actually do something with our cash. But the easiest thing to do is to do nothing when you don't know what to do. So here we are at nearly the midpoint of 2021 and still sitting on cash.
You've surely done the math and found that it works for your ages, portfolio size, and SS check(s) for inflation.
The biggest risk is taking no risk at all.
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anon_investor
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Re: How much cash do you hold in your investment account?

Post by anon_investor »

Who needs cash when you can have I Bonds?
Marseille07
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Re: How much cash do you hold in your investment account?

Post by Marseille07 »

anon_investor wrote: Sat Jun 05, 2021 2:10 pm Who needs cash when you can have I Bonds?
Those who need more than 10K/year of I Bonds in EF.
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anon_investor
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Re: How much cash do you hold in your investment account?

Post by anon_investor »

Marseille07 wrote: Sat Jun 05, 2021 2:13 pm
anon_investor wrote: Sat Jun 05, 2021 2:10 pm Who needs cash when you can have I Bonds?
Those who need more than 10K/year of I Bonds in EF.
VTSAX as an EF then. :twisted:
smectym
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Re: How much cash do you hold in your investment account?

Post by smectym »

right now, $3000 in a 7-figure brokerage account
bluegill
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Re: How much cash do you hold in your investment account?

Post by bluegill »

zero, $0
Robot Monster
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Re: How much cash do you hold in your investment account?

Post by Robot Monster »

gwe67 wrote: Sat Jun 05, 2021 11:32 am The biggest risk is taking no risk at all.
I don't think it's actually possible to take "no risk at all" for the simple reason everything has risk. Cash has inflation risk. The Fed has made promises that they will act to control inflation if it moves materially above 2% in a persistent way (see below) but there is simply no guarantee 1) that they'd be successful, or that 2) they won't change their inflation target.

(100% TIPS might conceivably work for some, though an issue there is TIPS' maximum duration is 30 years. Someone in their 70's might safely be 100% TIPS, someone in their 40's might need stocks to augment their TIPS. Anyway...)

***

J.Powell: "We understand our job we will do our job and we are focused as you seen for many years We have been focused on inflation 'deviating' below 2%, and we used our tools aggressively to put it back up at 2% if we do see inflation moving materially above 2% persistent way the risks of inflation expectation drifting up then we will use our tools to guide inflation and expectation back down to 2% no one should doubt that we will do that this is not what we expect but no one should doubt that in the event we will be prepared to use our tools."
YouTube video link
Begins at the 4:30 mark.
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Re: How much cash do you hold in your investment account?

Post by dbr »

Robot Monster wrote: Sun Jun 06, 2021 9:04 am
gwe67 wrote: Sat Jun 05, 2021 11:32 am The biggest risk is taking no risk at all.
I don't think it's actually possible to take "no risk at all" for the simple reason everything has risk. Cash has inflation risk. The Fed has made promises that they will act to control inflation if it moves materially above 2% in a persistent way (see below) but there is simply no guarantee 1) that they'd be successful, or that 2) they won't change their inflation target.
Right. And there is more to cash risk than that. If one starts at the technical definition that investment risk is the variability of returns, then the risk in cash is how variable is the return. One can do that in real or in nominal dollars. Anyway, the nominal interest rate on cash varies around from 0% to 5%, let's say in recent years, for a risk of +/- 2% or something. Comparable numbers for bonds might be 6% and for stocks, 20%.

Just to bring home that his is not a trivial concern, investors who five years ago might have tried to depend on income from a 5% CD have been in a world of hurt when finding that those CDs can't be renewed for better than 1%.
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Re: How much cash do you hold in your investment account?

Post by Beardog »

About 3% of our money is in cash. All of it is in a brick and mortar bank.

I would much prefer no cash, except perhaps 1-2 months of expenses. However, my wife of 38.5 years (and counting!) feels vey secure when she can see a sizable sum of cash in her checking account. If the checking account (which has always been entirely her domain in our long marriage) dips below a certain level, she gets nervous. So, has it always been a slight drag on our portfolio? Yes. Do I mind indulging my wife's insecurity, which I can in no way personally understand? No. She has always paid our bills on time, taken care of paying our taxes, took care of our home, stayed home with our 3 children until they were grown and gone from home a few years ago, and still pampers me like I am a prince. I don't think that we have ever had a single late charge or a ding on our credit score. We have no mortgages, one credit card, and one checking account. She has done very well with her side of our marriage, and I have done fairly well with my side (working, providing for us and our family, long-term investments in tax deferred accounts and our brokerage account), so why rock the boat at almost 60 years old? She has always understood that any money in our investments was off-limits for everyday spending and paying bills, so the checking account was, and will always be her security blanket. I am OK with that! :D
Beardog
mptfan
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Re: How much cash do you hold in your investment account?

Post by mptfan »

I keep $1,268.58.
mikejuss
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Re: How much cash do you hold in your investment account?

Post by mikejuss »

Is this a trick question? Why would you keep cash in an investment account? I have none there.
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Re: How much cash do you hold in your investment account?

Post by dbr »

Beardog wrote: Sun Jun 06, 2021 10:32 am About 3% of our money is in cash. All of it is in a brick and mortar bank.

I would much prefer no cash, except perhaps 1-2 months of expenses. However, my wife of 38.5 years (and counting!) feels vey secure when she can see a sizable sum of cash in her checking account. If the checking account (which has always been entirely her domain in our long marriage) dips below a certain level, she gets nervous. So, has it always been a slight drag on our portfolio? Yes. Do I mind indulging my wife's insecurity, which I can in no way personally understand? No. She has always paid our bills on time, taken care of paying our taxes, took care of our home, stayed home with our 3 children until they were grown and gone from home a few years ago, and still pampers me like I am a prince. I don't think that we have ever had a single late charge or a ding on our credit score. We have no mortgages, one credit card, and one checking account. She has done very well with her side of our marriage, and I have done fairly well with my side (working, providing for us and our family, long-term investments in tax deferred accounts and our brokerage account), so why rock the boat at almost 60 years old? She has always understood that any money in our investments was off-limits for everyday spending and paying bills, so the checking account was, and will always be her security blanket. I am OK with that! :D
Absolutely, and well done!

A couple or three percent in cash is perfectly typical of the come and go of managing money. It is there for convenience and ease of keeping the system running. We are running about 1.5% cash right now, but 2% is not uncommon. The mean and standard deviation of our portfolio % in cash is 2.4% +/- 2.3%
arsenal_fan
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Re: How much cash do you hold in your investment account?

Post by arsenal_fan »

I've settled on this. 12-15k in bank account from which all bills are paid (need to withdraw cash etc) and where my salary gets direct deposited. A floating 20k in a different bank account for chasing bank sign up bonuses since they often tempt me and secure me for any big expenses not covered by the regular account. Finally I have 50k in IBonds which serves multiple purposes viz. Bonds in portfolio and/or downpayment for house buying etc. If bank account 1 total exceeds 15k, I move the excess into VTSAX/VTIAX.
Wanderingwheelz
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Re: How much cash do you hold in your investment account?

Post by Wanderingwheelz »

$4.11

It would be $0 but we use ETFs and not mutual funds, so we’re never at a $0 balance.
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Re: How much cash do you hold in your investment account?

Post by PhoebeCoco »

Retired. Portfolio is 10% cash. This makes me feel safe, and prevented me from doing fear-based selling during the mini-crash of March, 2020.
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Re: How much cash do you hold in your investment account?

Post by pascalwager »

mikejuss wrote: Sun Jun 06, 2021 10:34 am Is this a trick question? Why would you keep cash in an investment account? I have none there.
A few years ago I had $1 million in Vanguard Treasury MMF as my fixed-income asset. (Now it's all in bonds with about 9 years overall duration.)
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JBTX
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Re: How much cash do you hold in your investment account?

Post by JBTX »

I don't hold a material amount percentage wise. I may have a couple of thousand here and there based on etf dividends or having to buy etfs number of shares, and not wanting to buy too much if prices fluctuate.

A few of the funds I have may have small cash positions.

Almost all of my cash is in bank accounts, most of it higher yielding ones.
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Re: How much cash do you hold in your investment account?

Post by pokebowl »

Right now, $23 in my taxable account. Usually this is zero or close to zero give or take a couple pennies. My checking account as well usually only has enough to cover last months bills. Otherwise I hold zero cash across all accounts. Its either spent or invested. :greedy
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Re: How much cash do you hold in your investment account?

Post by GoneOnTilt »

Beardog wrote: Sun Jun 06, 2021 10:32 am About 3% of our money is in cash. All of it is in a brick and mortar bank.

I would much prefer no cash, except perhaps 1-2 months of expenses. However, my wife of 38.5 years (and counting!) feels vey secure when she can see a sizable sum of cash in her checking account. If the checking account (which has always been entirely her domain in our long marriage) dips below a certain level, she gets nervous. So, has it always been a slight drag on our portfolio? Yes. Do I mind indulging my wife's insecurity, which I can in no way personally understand? No. She has always paid our bills on time, taken care of paying our taxes, took care of our home, stayed home with our 3 children until they were grown and gone from home a few years ago, and still pampers me like I am a prince. I don't think that we have ever had a single late charge or a ding on our credit score. We have no mortgages, one credit card, and one checking account. She has done very well with her side of our marriage, and I have done fairly well with my side (working, providing for us and our family, long-term investments in tax deferred accounts and our brokerage account), so why rock the boat at almost 60 years old? She has always understood that any money in our investments was off-limits for everyday spending and paying bills, so the checking account was, and will always be her security blanket. I am OK with that! :D
This is awesome!
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Re: How much cash do you hold in your investment account?

Post by Robot Monster »

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Last edited by Robot Monster on Sun Jun 20, 2021 9:28 am, edited 1 time in total.
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Rob Bertram
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Re: How much cash do you hold in your investment account?

Post by Rob Bertram »

I have about -947,329.70 in cash in my brokerage account. With margin rates this low (about 1%) and expected to stay low, it was an easy choice for me.
atdharris
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Re: How much cash do you hold in your investment account?

Post by atdharris »

As little as possible. I tend to let the dividends build up to a level where I can buy more VTI. The cash I keep on hand in the event I need it is at Marcus bank.
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Re: How much cash do you hold in your investment account?

Post by Doc »

Rob Bertram wrote: Mon Jun 07, 2021 1:02 pm I have about -947,329.70 in cash in my brokerage account. With margin rates this low (about 1%) and expected to stay low, it was an easy choice for me.
For $250k to $500k I am seeing 6.5 to 6.6% at Schwab, Vanguard and Fidelity. And maybe as low as 4% over $1million.

Who's your broker?
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Re: How much cash do you hold in your investment account?

Post by Jonbuck »

Beardog wrote: Sun Jun 06, 2021 10:32 am About 3% of our money is in cash. All of it is in a brick and mortar bank.

I would much prefer no cash, except perhaps 1-2 months of expenses. However, my wife of 38.5 years (and counting!) feels vey secure when she can see a sizable sum of cash in her checking account. If the checking account (which has always been entirely her domain in our long marriage) dips below a certain level, she gets nervous. So, has it always been a slight drag on our portfolio? Yes. Do I mind indulging my wife's insecurity, which I can in no way personally understand? No. She has always paid our bills on time, taken care of paying our taxes, took care of our home, stayed home with our 3 children until they were grown and gone from home a few years ago, and still pampers me like I am a prince. I don't think that we have ever had a single late charge or a ding on our credit score. We have no mortgages, one credit card, and one checking account. She has done very well with her side of our marriage, and I have done fairly well with my side (working, providing for us and our family, long-term investments in tax deferred accounts and our brokerage account), so why rock the boat at almost 60 years old? She has always understood that any money in our investments was off-limits for everyday spending and paying bills, so the checking account was, and will always be her security blanket. I am OK with that! :D
I completely agree with you on this. Everyone is a little bit different. I have been married 20 years this month and my wife and I both came from very modest/humble beginnings. There is something about seeing a large cash cushion in the checking account which actually releases us to invest with a long term and un-emotional approach to things. When our checking account has dropped below a certain point it creates an un needed anxiety even though it may be mathematically irrational as we both have relatively stable jobs, we have no debt besides our house which we technically could pay off tomorrow if we desired and our net worth continues to grow consistently putting us I. A better situation each month. I know the cash creates some drag, but I have decided that a little bit of drag and a little slower pace of net worth accumulation is worth the greater peace and ability to relax even when the market is rather volatile.

As time progresses and our 457 account balance (which we have increased monthly contributions to this year) and taxable brokerage dividends reach a certain level we may reduce our cash holdings some as we know we have cash flowing to us consistently through dividends and we could tap our 457 account if we ever had an unforeseen massive emergency. As of right now though between savings and checking we have between 12-15 months of expenses in cash.
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Re: How much cash do you hold in your investment account?

Post by Rob Bertram »

Doc wrote: Tue Jun 08, 2021 11:00 am
Rob Bertram wrote: Mon Jun 07, 2021 1:02 pm I have about -947,329.70 in cash in my brokerage account. With margin rates this low (about 1%) and expected to stay low, it was an easy choice for me.
For $250k to $500k I am seeing 6.5 to 6.6% at Schwab, Vanguard and Fidelity. And maybe as low as 4% over $1million.

Who's your broker?
Interactive Brokers. They have progressive margin rates that decrease based on how much you borrow: https://www.interactivebrokers.com/en/index.php?f=46376

We have a fairly long thread on them: Interactive Brokers (Best Kept Secret)

For people with a large balance in their taxable account, margin is a great alternative to a HELOC, for example. For people like me who like to have a leveraged portfolio, Interactive Brokers has some of the lowest costs across all categories.
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Re: How much cash do you hold in your investment account?

Post by Doc »

Rob Bertram wrote: Tue Jun 08, 2021 12:57 pm For people with a large balance in their taxable account, margin is a great alternative to a HELOC, for example. For people like me who like to have a leveraged portfolio, Interactive Brokers has some of the lowest costs across all categories.
Hhmmnn. Thanks.
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Spinola
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Re: How much cash do you hold in your investment account?

Post by Spinola »

None. But I do have about 8% in the liquid version of TIAA Traditional, which is close enough to :moneybag :dollar ready to backbup the truck if/when the market tanks.. :mrgreen:
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Re: How much cash do you hold in your investment account?

Post by DanLeeRot »

The amount of cash I hold is: $0/zero/zilch/goose egg/naught/nil/nothing.
The investor's chief problem-and even his worse enemy-is likely to be himself. Benjamin Graham
hulburt1
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Re: How much cash do you hold in your investment account?

Post by hulburt1 »

I'm 68 have 250000 cash, 1m in apple and S&P. Cash is for my next 10 years. The 1m could be 2m in 10 years. Or 0. Live on 25000. not taking SS
until 70
I have 250000 in Roth also. I think most people would be happy If they had 1m+ in apple and the S&P. and enough in cash to live for 10years at 68. :sharebeer
dkturner
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Re: How much cash do you hold in your investment account?

Post by dkturner »

$0.29
Robot Monster
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Re: How much cash do you hold in your investment account?

Post by Robot Monster »

hulburt1 wrote: Sat Jun 19, 2021 7:30 am Cash is for my next 10 years...enough in cash to live for 10 years at 68. :sharebeer
:beer indeed! I basically have that, too. My strategy document is:

Money Requirements with spend rate $XXXK, inflation 2.5%

2021-mid2030 -- $XXX needed
Investments:
$XXX of TIPS matures end of 2024
$XXX treasury money market

2031-2039 -- $XXX needed
Investments:
$XXX of TIPS matures July of 2030
$XXX Vanguard Inflation-Protected Securities Fund Admiral Shares (VAIPX)

2040-beginning of 2050 -- $XXX needed
$XXX VAIPX (note: this violates the rule of thumb, established in vineviz's excellent thread about duration matching, of matching duration of one's bond holdings with one's investment horizon. link)

2050 onwards
$XXX TIPS matures 2/2050
$XXX TIPS matures 2/2051
$XXX in stocks/commodities
"Picking an AA and sticking with it will get you much better off than any strategy that relies on pontificating on the market." -- our favorite golfer
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