One of my Grandfather’s did this stuff a ton and none of us had any idea because he never talked about it, not even to my dad. We found out when hundreds of people came to his wake and funeral.
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Question. How much do you all keep in cash? I.e. just in a normal bank account?
Do you consider this in terms of your overall risk position? I.e. if you have more in cash, does that mean you have less in bonds?
I have 3 months wages in cash in an offshore account (perfectly legally from when I worked overseas). Seems a useful thing to have.
Trying to decide whether to bring it back and put into ETFs.
We have 10 percent, and we do reduce our bonds accordingly. AA 60/30/10
But I’m slowly moving the cash to I-Bonds (we are allowed $20k per year between me and my wife) which will hold it’s own against inflation and can quickly be turned into cash.
Separately, and not included in our portfolio (just a personal choice for how we do things), we have another 6 months expenses just sitting in a bank account.
If I was young I would have 6-12 months expenses in cash EF with no cash in investment portfolio and AA something like 80/20. That’s what we did for years, except only 3 months in EF which wasn’t enough.
But this is really all preferences and risk tolerance. We can almost retire now so have de-risked accordingly.
Don’t track it closely but usually 6ish months of expenses in cash, also have some stuff that could be quickly liquidated for cash if needed so we probably don’t have to keep that much set aside.
I have a bunch in ETFs. Seems pretty easily to liquidate. Is there any downside to moving back and forth between ETF and cash? Other than transaction costs?
You don’t have to pay taxes on gains?
I’m new to this. And in Australia.
I think I would, but wouldn’t I need to pay tax on the gains eventually anyway?
Not sure in Australia, but in the US the answer is somewhere between no, and yes on some portion. (That assumes the investments are in a regular brokerage account, not a retirement account.)
The other big downside to keeping money you may need in stocks, (I’m assuming you mean stocks when you say ETFs, but there are all kinds of ETFs including some that contain no stocks), is that if the market is down a lot when you need cash it can cause problems. There are arguments against this line of thought, but I’m fairly conservative, and most of the arguments come from a more aggressive line of thinking.
Yes. The funds are normally sitting in some sort of low interest savings account which is pretty similar to just owning some very short term bonds.
You have to pay capital gains on ETF’s in Australia but you get a 50% discount if you’ve held the asset for at least 12 months.
Ah. Okay. That’s super relevant info! Thank you!
Any good forums with an australia focus?
Also. With that. I’m also guessing it’s better to have your capital gains when you are earning less?
I believe capital gains are paid at your regular tax rate, so if you sell when in a lower tax bracket you’ll pay less tax. Assuming selling doesn’t push you into a higher tax bracket.
As a new somewhat early retiree at age 56, my plan calls for holding 2-3 years’ worth of expenses in a CD ladder as a hedge against bear markets. In a down year, I can use a CD to live off of, instead of pulling principal out of stock funds when they are way down. I also have money that should be in bonds per my plan, but because bonds seem to be a failure as an investment vehicle, I’m just keeping it in cash until I figure out something better.
My eventual target in 9 or so years is to be at 80% stocks/15% bonds/5% cash as a long-term allocation.
While I was in the accumulation phase, I would typically have at least a year’s worth of expenses in cash/short-term bonds/CDs, but I had a very high cash flow with college tuition and mortgage, so it felt less like an emergency fund, and more like money that was spoken for in the next year, and needed to be replenished. So there was no thought of putting it in stocks, where it could just lop off 10 or 40% over a few months.
Whatever you end up with, make a written plan that you can refer to, and put it on auto-pilot, checking like once a month or less.
Chase Sapphire Reserve is $550 now, and the $300 you get back is trivial. I also found it much easier to get better value out of my points. I switched a few years ago from Amex Platinum and am really glad I did, even if Centurion Lounges are the best lounges.
Does the online grocery apply to any service like Shipt?
Seems like a great deal. Thanks!
I have found that Amex points can be insanely valuable in certain situations, but it requires a shitload of work to maximize the value. Specifically, you can get .10 or more per point of value on certain international business class tickets, but availability is a major problem and actually transferring the points and booking the tickets is pretty stressful.
Yeah this is what I found most frustrating about Amex. Meanwhile with Chase, I can get about 0.075 buying any flight on any airline I want at any time.
Chase Sapphire >> Southwest is like 90% of my points transfers. Other 10% is for fancy flights for stuff like my honeymoon.
United and Korean Air are great transfer partners as well.
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sweet, didn’t hear about this but that’s my main card.