How much cash do you hold?

[2Birds1Stone]

We also have a brokerage account for after tax savings, invested in the market.  It is like a savings account in the sense that we could spend it all on 48 hours notice, but it's not cash.

I feel stupid, never thought of it like that!

[Thedividebyzero]

We are really good at saving (currently 75% savings rate), but have not done a great job of managing excess cash.  Here's an example:  I have enough cash to payoff my home loan, but I haven't.   I could have added to my investment position in low cost index funds, but I haven't.  Why you might ask?  Two words.

Greed:  haven't paid off the mortgage because the interest rate is only 3.25% and I know that over the long term, diversified index funds will outperform 3.25%.

Fear:  I have been waiting for a market correction.  I don't want to buy at a peak in the market. 

So I have missed out on a guaranteed 5-ish% "return" (3.25 mortgage + 2% inflation) because I am too greedy to limit myself to a 3.25% return and too fearful that as soon as I drop a big chunk of money in the market, the market will correct. 

Remedying this mistake is at the top of my New Year's list of resolutions

- Zero

[Bateaux]

About 10% cash right now, it's about a year of gross earnings.   About $5,000 in paper bills and about 160k idling in the bank. 

[SpareChange]

You can get a LOC without a house. I was a renter for years and always had a LOC. Very handy and free until you need it.

Thank you! A margin account is itself a LOC...just secured by the investments and cash in my taxable account. Yep, it has come in handy for me too. 

[Indexer]

I've been thinking about this too.

I have some cash in a high yield savings account. I've been considering moving some of it to Vanguard and putting it in a short term corporate bond fund/ETF, VCSH. Rate is 2.28%.

[Mezzie]

We can go three months if we both can't work and five or six months if one of us can't work (depending on which one). It assumes super frugal living (we would be saving on commuting, cutting all non-necessities, etc.). It used to be twice that, but we did some major repairs and investing. I'm in the process of deciding if I want to build back up to the previous amount or invest more.

[Carrie]

Right now we have $59k, but we are holding cash for an upcoming move. After we're done with the upheaval we'll go back to about $25k in cash, which is 6-8 months expenses.

[Dicey]

Thanks for all of the feedback. Um yeah I didn't mean paper money but rather currency rather than investments.

$10K is about what I had in mind though that wouldn't last me too long in case of losing my job. I am an RN in an emergency department so my employment is not contingent on the market.

I do have a spouse, she works and is in nursing school at the moment. Yes pets, no dependents. We work for different agencies at the moment but eventually will work at the same hospital. One vehicle. One house.

I read what MMM said about HELOC - is it difficult to set up? That seems like a good idea as long as the balance is $0. Also my CC limit is $7K and I keep the balance at zero so I guess that should factor in as well.

Also what does COL stand for?

Thanks so much

COL is "cost of living"- so san fransisco is a high COL (HCOL) city, whereas like... Topeka is low COL (LCOL). (please note, I know nothing about Topeka, I'm just guessing here).

Also, you'll see the term most often with an A on the end, which stands for "Area". This message sent to you from the beautiful Bay Area, home of San Francisco, one of the Highest COLAS (HCOLA) in the world. Insane, but a lot of fun and no snow.

To answer the OP's question, we currently have a huge pile of cash (six figures). We're hoping to buy a couple more SFHs (Single Family Homes) in our target area. Some of it came from a successful flip we did last year, some from selling some other real estate, some because we just don't spend to our income and it just accumulates. We have our eye on another house to flip later this year, or just grab a couple more rentals.

Like 2B1S, I was always in commission sales. I lived on last month's money and eventually it became last quarter's money, just because I've always been a saver. It makes life much more stress free.

Yes, I am aware that this is a lot of money doing "nothing", but it gives us the patience to wait for the right deals. In the last year or so, we bought and rehabbed two rental properties and did one straight-out flip with a major rehab. It was nice not to have to worry about cash flow. We also have our FIRE number in investment accounts, so keeping this cash to do other things is okay.

[Slinky]

Now that I'm getting a taxable investment account going, I'm phasing out of a dedicated cash eFund. I'll keep probably $10k in bonds accessible through check writing. That makes my money easier to access than my previous high interest savings account which took a couple of days to transfer. And then, of course, there's always the option to liquidate other investments if we ran into a really bad situation. Typically, my husband and I both have a few grand in our checking and we might have additional cash in short term savings so we absorb most unexpected expenses (car repair, furnace replacement, etc) using cash flow, general operating cash, credit card float, etc. If I'm tapping my taxable funds, it's going to be something majorly major.

[FIRE Artist]

I am surprised at how high some of these numbers are.  I keep the next month's expenses on hand plus I accrue 1/12th of known annual expenses, including vacations, every month with YNAB.  I usually have 4-6K in my account depending on when the annual expenses fall.  Everything else is invested in taxable or sheltered accounts.

Through lines of credit, and credit cards I have easy access to 200K of credit, so I can't imagine needing to keep more cash on hand than I already do -  the interest on my line of credit is sufficiently low that I likely wouldn't sell investments to cover it, I would just channel the future money I would invest into paying that off instead (this decision would be taken at the time, considering market conditions, size of debt owing, cash flow etc). 

[fa]

We also have a brokerage account for after tax savings, invested in the market.  It is like a savings account in the sense that we could spend it all on 48 hours notice, but it's not cash.

I feel stupid, never thought of it like that!

In a severe bear market, that account can lose 50% of its value in short order.  That is the risk.  Without cash reserves and without a working income, you would be forced to sell your stocks at a huge loss.  I think sol works, so he probably feels he doesn't need the cash due to his income.  If you are retired, it is a different story.

[Retire-Canada]

In a severe bear market, that account can lose 50% of its value in short order.  That is the risk.  Without cash reserves and without a working income, you would be forced to sell your stocks at a huge loss.  I think sol works, so he probably feels he doesn't need the cash due to his income.  If you are retired, it is a different story.

Holding cash is a significant drag on your investments. It doesn't take a terribly long time for invested funds to equal and then exceed the value of a cash EF even during a market crash.

Option 1 - Hold $10K cash in a 1% savings account with 2% inflation

- 5yr = $9.5K
- 10yr = $9.0K
- 15yr = $8.6K
- 20yr = $8.2K

Option 2 - Invest $10K in stocks and get 7% after inflation [number is brackets is value after 50% drop]

- 5yr = $14K [$7k]
- 10yr = $19.7K [$9.8K]
- 15yr = $27.6K [$13.8K]
- 20yr = $38.7K [$19.3K]

So ya selling stocks after a 50% crash feels bad, but if you still end up with more money than you would holding cash it's the smarter move.

[Macrolide]

COL is "cost of living"- so san fransisco is a high COL (HCOL) city, whereas like... Topeka is low COL (LCOL). (please note, I know nothing about Topeka, I'm just guessing here).

CNN Money cost of living calculator confirms, a bank account in San Fran holding $10,000 immediately swells to $19,000 when you escape the bay area and settle in lovely Topeka. (I also know nothing about Topeka. Just guessing that it is lovely).

[Dicey]

COL is "cost of living"- so san fransisco is a high COL (HCOL) city, whereas like... Topeka is low COL (LCOL). (please note, I know nothing about Topeka, I'm just guessing here).

CNN Money cost of living calculator confirms, a bank account in San Fran holding $10,000 immediately swells to $19,000 when you escape the bay area and settle in lovely Topeka. (I also know nothing about Topeka. Just guessing that it is lovely).

Um, not going to go from the Bay Area to find out. Just sayin'.

[Fomerly known as something]

Currently about a years worth of expenses plus a dedicated accounts for things like property taxes.  I keep cash in lieu of bonds, plus I'm anticipating some major expenses over a short time period (less than 5 years) and have needed cash in the past (2008) when I didn't have enough and had to cash out investments that were down.

[fa]

In a severe bear market, that account can lose 50% of its value in short order.  That is the risk.  Without cash reserves and without a working income, you would be forced to sell your stocks at a huge loss.  I think sol works, so he probably feels he doesn't need the cash due to his income.  If you are retired, it is a different story.

Holding cash is a significant drag on your investments. It doesn't take a terribly long time for invested funds to equal and then exceed the value of a cash EF even during a market crash.

Option 1 - Hold $10K cash in a 1% savings account with 2% inflation

- 5yr = $9.5K
- 10yr = $9.0K
- 15yr = $8.6K
- 20yr = $8.2K

Option 2 - Invest $10K in stocks and get 7% after inflation [number is brackets is value after 50% drop]

- 5yr = $14K [$7k]
- 10yr = $19.7K [$9.8K]
- 15yr = $27.6K [$13.8K]
- 20yr = $38.7K [$19.3K]

So ya selling stocks after a 50% crash feels bad, but if you still end up with more money than you would holding cash it's the smarter move.

Your point is well taken: holding cash is a drag on your ROI.  That is why you have to decide if you want to "pay that insurance policy".  Your example illustrates it well:  a 10-20 year time horizon is way longer than the typical early retiree could afford to sit on their investments without selling.  For a regular retiree, that could exceed their life expectancy.

[Retire-Canada]

Your point is well taken: holding cash is a drag on your ROI.  That is why you have to decide if you want to "pay that insurance policy".  Your example illustrates it well:  a 10-20 year time horizon is way longer than the typical early retiree could afford to sit on their investments without selling.  For a regular retiree, that could exceed their life expectancy.

I don't understand your point. What that table shows is that the cost of holding a cash EF for the many decades of your life is massive. If I tried to sell you a $10K emergency situation insurance policy and offered that cost you'd laugh at me.

Invest your EF. Get a LOC and if you need to sell some investments even during a crash it's not the horrow show that it's made out to be.

[soccerluvof4]

I have been shaving as the market has risen so currently have 3x's my withdrawl rate or 3 years in cash. More than I prefer but it is what is helping me sleep at night and if we get any kind of pull back I will put 2/3 of it back in and  I am not withdrawing anymore unless we get a significant upswing.

[Cryocash]

I keep half of previous paycheque as cash or $2500. Basically  whichever is smaller. Every thing else stays invested. Stock, etfs, money markets... they all can be sold in 3 business days.

[MrsDinero]

We used to keep too much cash, but as we have been becoming more comfortable with investing, we decided that each of us would keep about $20k in savings.  This is still a lot compared to most people, but for us this is our "comfort zone".

[SeattleStache]

I keep $14,000 invested conservatively with VTENX and around $3,000 cash in checking which would cover one mortgage payment for my rental property and one month's rent payment for the apartment where I live. The $14,000 would cover around three months of living expenses included that mortgage payment, rent payment, and other non bare bones spending. I'm single, steady job, no kids, one old lady dog. I see my Roth as my super emergency back up savings and could go a couple years off what I've got saved there. I'd most likely sell my rental before touching that though.

[Novik]

I have over 4 years of my expenses sitting in a savings account.... *hangs head*

Goals for 2017 include figuring out how to invest that as a dual citizen without pissing off the IRS (for example, ~30k used to be in a TFSA, but that's a Canadian account the IRS does not like, so I closed it in December). I need to open an RRSP but that will only account for about 7k.

I think if I could easily invest all my excess cash, I would like to have ~5k in a chequing account avoiding fees and being super available, and another 5-10k in an online high interest savings account. That would be 7-10 months expenses, depending on how much I tightened my belt if I lost my job, and would mean I could easily pay insurance deductibles, car repairs, etc and still have a solid emergency fund.

[fa]

Your point is well taken: holding cash is a drag on your ROI.  That is why you have to decide if you want to "pay that insurance policy".  Your example illustrates it well:  a 10-20 year time horizon is way longer than the typical early retiree could afford to sit on their investments without selling.  For a regular retiree, that could exceed their life expectancy.

I don't understand your point. What that table shows is that the cost of holding a cash EF for the many decades of your life is massive. If I tried to sell you a $10K emergency situation insurance policy and offered that cost you'd laugh at me.

Invest your EF. Get a LOC and if you need to sell some investments even during a crash it's not the horrow show that it's made out to be.

You are correct if your time horizon is decades.  Having to sell significant assets early on in your retirement has a devastating effect on your portfolio longevity.  It has a name: sequence risk.  I am not suggesting a cash position sufficient to cover decades.  Avoiding stock sales for a year or so is probably more than sufficient.

This is a really important topic, so I am interested in understanding this better.  If I am misguided, I would love to understand better.  Thanks for your input.

[Fishindude]

Presently have about three years worth of expenses in cash (savings, checking & CD's), but need to put some of that money to work. 
Will likely always maintain at least one years worth.

Also keep anywhere from $2-5,000 cash on hand most of the time for mad money; weekend trips, eating out, misc. spending, etc.

[FIRE Artist]

Your point is well taken: holding cash is a drag on your ROI.  That is why you have to decide if you want to "pay that insurance policy".  Your example illustrates it well:  a 10-20 year time horizon is way longer than the typical early retiree could afford to sit on their investments without selling.  For a regular retiree, that could exceed their life expectancy.

I don't understand your point. What that table shows is that the cost of holding a cash EF for the many decades of your life is massive. If I tried to sell you a $10K emergency situation insurance policy and offered that cost you'd laugh at me.

Invest your EF. Get a LOC and if you need to sell some investments even during a crash it's not the horrow show that it's made out to be.

You are correct if your time horizon is decades.  Having to sell significant assets early on in your retirement has a devastating effect on your portfolio longevity.  It has a name: sequence risk.  I am not suggesting a cash position sufficient to cover decades.  Avoiding stock sales for a year or so is probably more than sufficient.

This is a really important topic, so I am interested in understanding this better.  If I am misguided, I would love to understand better.  Thanks for your input.

It all comes down to your asset mix that you choose for yourself based on your risk tolerance. 

I am about 5 years out from my planned FIRE date and I currently keep 25% of my portfolio in an aggregate bond index (Assertive investor profile as per the Canadian Couch Potato), this is equivalent to 4 years of my planned FIRE expense, so I think the worry of selling equities at a loss is not an issue for me.  If someone is thinking they are a super bad ass, high-risk profile investor with 100% equities, only to then hold 6 months - 1-2years in cash just in case, they are fooling themselves. 

I consider cash on hand to be useful only for those who are currently holding debt and need the cash cushion to prevent disaster if they lose their job.  For those of us well into our accumulation, the cash on hand emergency fund is not necessary. 

[Retire-Canada]

You are correct if your time horizon is decades.

Unless you are 90yrs old your time horizon is at least a decade when it comes to an emergency fund or how to deal with emergencies.

[Samuel]

To be honest, I feel kind of antsy with less than 20k sitting in the bank, but that's pretty much a year+ of spending for me on a normal basis (not "shit I've lost my job and the economy is tanking, better tighten my belt" spending).  I've gradually moved all my excess over to Vanguard (within the last 2 months, even), and am trying to be comfortable with about having 5k in savings and about 1.5k in checkings.

I also keep around 20k in savings. It's definitely conservative for a single renter but having had some anxiety issues in the past I look at the excess cushion as preventative medicine. On paper I'm losing out on potential gains but it's hard to put a price on the health and happiness improvements.

Assuming an opportunity cost of 7% return on the 20K in cash -- which is hardly a safe assumption, no matter what folks say -- you're basically paying/giving up $1,400 to sleep like a baby at night, 365 days per year.  That seems reasonable to me . Seems like a better way to spend the money than on a relaxing 5 day vacation.  The way you do it, you're brain is on a vacation every day of the year :)

Embarrassingly, I've never actually done the math on this (I'm not a numbers geek by nature).  $116 a month isn't a terrible peace of mind bill, but I can't help wonder if cutting the emergency fund to 10k ($58 a month) or 15k ($87 a month) would really feel that much more insecure. 

I might play with this a bit. Thanks for the helpful reminder to reassess assumptions every so often.

[CanuckExpat]

I have over 4 years of my expenses sitting in a savings account.... *hangs head*

We're probably currently about 4 - 5 years of annual spending in "cash" as well. It's a somewhat special/temporary case in that we sold our primary residence last year, and we might choose to buy a primary residence again sometime in the short to medium term. Of course, life is made up of special cases :)

Our investment asset allocation does not target 100% equities, and I count the cash reserves as part of our fixed income allocation so it's currently displacing bonds. We've recently FI/RE'd, so if we don't first use the funds for a primary residence purchase, the plan is to deplete the cash reserves with our normal spending in the first years of retirement and not replenish them. It's a a lazy man's approach to a rising equity glide path in retirement, if you don't mind stretching the term.

It's more conservative than we need to be, but we are happy to pay the price over the short/medium term for peace of mind (given recent market returns, it's a steep price).

I think another thing to consider is what returns you are getting on your cash holdings. By getting the timing right, we've got some of our cash at 3%, 5% used to be possible but those deals seem dead. 3-5% returns is probably more than I expect to get from our bond allocation (though I'd love to be proved wrong), so if you can get decent returns, cash isn't bad :)

[accolay]

Working up to about 20k in savings account cash. I think I'll feel more comfortable with less when we have more in other accounts saved, but we have barely started our savings journey, so it may be a couple years until there is "enough" whatever that means.

[Helvegen]

$20k is a pretty popular number, incidentally, also the amount I keep in cash. I also keep $10k cash in my HSA.

I don't have a particularly high risk tolerance. I keep my allocations at an average of about 75/25.

I realize I will be losing out on gainz, but that's not really important to me. I imagine when the emergency happens, it will be about around the same time the market dumps. Don't invest more than you can afford to lose. I can't afford to lose 50% of that money or I would have invested it already. I'd rather not be forced to raid my Roths.

[steviesterno]

I've never understood the huge emergency fund idea. Like if it's a real, crazy, life changing emergency pull out of your 401 and incur the loss. that's fine. Car troubles, missing a pay check, unexpected travel is just part of life, best to be prepared for it.


I usually keep around $2k in the house, but it's hobby money. I have a hard time spending cash on a dumb purchase, so if I have it in cash I'm less likely to spend it. I keep it because I'm a competitive shooter, and often times I'll run into a shooter that needs to make rent or a car payment or whatever, and needs money fast. That's how you can pick up some really crazy deals.

I just got a $2400 pistol (hand made, one of my grail guns) for about $800 out of pocket. nobody around had the money so I snatched it up. It will be fun for me to shoot for a while, and if I need/want to later I can list it online to a wider audience and probably make money on it.

[Retire-Canada]

If your 401k dropped 50% rapidly, along with housing values, and credit dried up or was cancelled  and millions of jobs were lost like it did in the Great recession, you may not want to withdraw a large sum from what remainds.

If you invest $X and it grows to $2X and then the market drops 50% exactly when you need the money you still have $X dollars. In most cases [not a 50% crash] you will have much more and over the course of your investing life you will have many times $X if you invest it.

That's the problem with holding cash. You are paying a stiff price for a feeling of security that can be had a much more cost effective way.

The rationale you posted for holding cash instead of investing it is essentially saying "I'm worried about the medium cost of a small risk so I'm going to for sure pay a huge opportunity cost to avoid it." That's not a great deal.

[Just Joe]

I've found great success in keeping an emergency stash in singles, I'll never, ever feel compelled to bust that money on something I don't really need. Kinda hard to go on a shopping spree with singles.

Then again, my cousin managed to spend $140,000  in nine months, mostly at strip clubs, so mostly in singles.

He got close to $170,000 as a settlement from a car accident. He bought a Subaru SVX for $22k, and the rest disappeared. Crazy.

THAT guy needs a girlfriend...

We aim to have about $10K in the bank where we can get to it. We take each month's surplus and lock it up some place safe (investments).

[accolay]

Holding cash is a significant drag on your investments. It doesn't take a terribly long time for invested funds to equal and then exceed the value of a cash EF even during a market crash.

Option 1 - Hold $10K cash in a 1% savings account with 2% inflation

- 5yr = $9.5K
- 10yr = $9.0K
- 15yr = $8.6K
- 20yr = $8.2K

Option 2 - Invest $10K in stocks and get 7% after inflation [number is brackets is value after 50% drop]

- 5yr = $14K [$7k]
- 10yr = $19.7K [$9.8K]
- 15yr = $27.6K [$13.8K]
- 20yr = $38.7K [$19.3K]

So ya selling stocks after a 50% crash feels bad, but if you still end up with more money than you would holding cash it's the smarter move.

All about comfort level. Speaking as one who likes a certain amount of cash, I don't feel comfortable not having any. Assuming I may have a different feeling when our net worth increases but still, I don't want to use a mortgage line or credit cards for an emergency fund. If for some reason I become unemployable for a number of months, I want cash. I don't want to figure out how to pay a credit card with no job. I don't want to take it out of investments.

I understand what you're getting at, but I think your numbers at 7% after inflation is a little high. Yes, the market has always historically gone up, but if it really shits for a few years and something happens, I still want the cash. A few thousand for the average middle class worker shouldn't take that much time to amass. 20k is only a few months for my household, and really wouldn't make a huge dent from lack of return 10 years out. If the lack of return on 20k is going to stop your life goals, then you're doing it wrong.

[Retire-Canada]

All about comfort level. Speaking as one who likes a certain amount of cash, I don't feel comfortable not having any.

I understand what you're getting at, but I think your numbers at 7% after inflation is a little high. Yes, the market has always historically gone up, but if it really shits for a few years and something happens, I still want the cash. A few thousand for the average middle class worker shouldn't take that much time to amass. 20k is only a few months for my household, and really wouldn't make a huge dent from lack of return 10 years out. If the lack of return on 20k is going to stop your life goals, then you're doing it wrong.

I would totally agree if you can't be comfortable without $20K cash close at hand than that's just how it is. I wouldn't suggest someone do something that keeps you up at night feeling uneasy.

On the other point let's use 6% if 7% seems high:

- $20K @ 6% for 20yrs = $66K
- $20K deflated @ 1% for 20yrs = $16.7K
- my life expectancy is around another 30yrs and my parents are in their nineties which means I could live longer
- so 20yrs is not a crazy timeline for the need for some sort of emergency fund

What I ask myself is - Am I rich enough to pay more than $46K to hold cash vs. investing the money and using a LOC? So far that answer has been no I am not rich enough to blow $46K for that.

The thing I don't get about the argument that folks are afraid of selling investments because it might happen during a crash and that may cost them some $$, but they are totally fine losing far more money for certain to avoid the smaller cost that is only a possibility. That doesn't compute for me.

If I packaged that as an emergency situation $20K insurance policy and tried to charge you that much for it you'd laugh at me.

[accolay]

I can dig it.

Now...how to peal a cucumber quickly.
https://youtu.be/TVSUS2wmzjM?t=141

[triangle]

...
The thing I don't get about the argument that folks are afraid of selling investments because it might happen during a crash and that may cost them some $$, but they are totally fine losing far more money for certain to avoid the smaller cost that is only a possibility. That doesn't compute for me.
...

I think people who do this do not agree with the "for certain" or "smaller cost" part of this statement. My own expectation/belief is that they are balancing the higher probability of experiencing a relatively small return (potentially not even keeping up with inflation) from their cash against the lower probability of experiencing a relatively higher loss of principle in the case where there is a drop in the stock market. Future market returns are uncertain and common wisdom should be always be questioned, but the overall stock market does not appear to be undervalued and long term & high yield bonds are not very attractive, so anyone without a job to provide current income might want to have a few years worth of expenses in cash (money market and very short term bonds) as buffer from a market downturn.

[itchyfeet]

I have no cash really. i try and invest my money or pay down debt as I earn it.

Reasons:
1. No reason to expect I won't be paid my salary next month. If my employment is terminated I am entitled under my contract to 3 months pay in lieu of notice.
2. I can redraw funds from my mortgage if need be until I get a new job. I have 200K available in my redraw.
3. My DW also has a job, which would more than cover our basic needs, and she is almost certain not to lose her job as she is a school teacher in the public sector.

Post FIRE my strategy will be different. I will hold some cash.

As we will be living off a mix of property rental income, dividends and drawing on our stash principal (and maybe a bit of govt pension later down the track), I will take a bet that we won't lose our tenants at the same time as the stock market tanks (in any case in Australia a tenant has to keep paying rent until a replacement tenant is found or their lease comes to an end. Leases are normally 12 months, so typically you get a little time to find a new tenant).

So the amount of cash we will hold will be 6 months expenses less estimated net rental income for the coming 6 months.

I will top up our cash quarterly (and rebalance my portfolio at the same time).

 I will plan major expenses (car replacement, major home repairs, international travel) 6 months in advance so I only draw cash for these activities if the market is in reasonable shape. If there was a major correction these big purchases would be delayed.

 I would also delay drawing funds for even day to day expenses for up to 6 months if required. I haven't decided finally on the trigger point for delaying a cash draw down. I am thinking a correction of >30%. I don't plan on worrying over 10% corrections. In the case of concurrent, extended deterioration in the market, then we might need to consider some contract work. We will see where we are at, at the time.

[SnackDog]

16% of portfolio is cash at the moment, after a Dec tax loss sale.  Could live on that for several years, I reckon.  It should get redeployed once the 30 day wash sale rule is up, unless I recklessly decide to time the market and wait for the Big Crash which has been imminent for about 7 years.   But that's what bonds are for anyhow.

Let's see how the market does during the first week of Trump.  I have a feeling this recent runup is along the lines of "buy the rumor, sell the news"; in other words speculation has pushed things up but once he starts to take action as Supreme Leader Wall Street will shit the bed.

[headwinds]

Thank you all for the diverse opinions, points of view, and strategies on this topic. It has really helped to shape how I think about this issue.

As of this moment I think I am sitting on $22K in cash and am satisfied holding there for the moment. Reasons:

Fiancee is in college and I am supporting her in a large way. She has no buffer at all so if disaster strikes like for example appendicitis or something else random or horrible she will have to turn to me.
Also we own a large property with four buildings, some of which are in need of repair which I plan to undergo in the summer.
We have no kids but one old cat with renal failure who needs regular vet checks, one aging but dapper older gentledog who needed at least one minor surgery in the last year, and one young and rambunctious pup who is injury prone. Vet bills add up quick.
I am at the point in my investing where the next priority is paying down student debt - inelastic debt if you will. Once I pay the principle, both the principle and the cash are gone forever and cannot be reclaimed.
Perhaps my strategy is too conservative and I will look into opening a HELOC to let sit idle in case of emergencies, maybe then I will be more aggressive and maintain a smaller cushion.

[Laserjet3051]

Sleeping well at night is one of my highest priorities in life. It is more valuable to me than FI, RE, building a stache, etc. As such, my goal is to hold 12 months of [core] expenses in cash. Presently at ~4 months of [core] expenses in cash. Quality of life/peace of mind/sleeping well at night proportionally increase with the size of my cash holdings.

[maizefolk]

Sleeping well at night is one of my highest priorities in life. It is more valuable to me than FI, RE, building a stache, etc. As such, my goal is to hold 12 months of [core] expenses in cash. Presently at ~4 months of [core] expenses in cash. Quality of life/peace of mind/sleeping well at night proportionally increase with the size of my cash holdings.

It's interesting to me that I'm generally much more sympathetic to this argument when it's presented as "a big cash buffer to help me sleep at night" instead of "a big chunk of my portfolio allocated to bonds to help me sleep at night."

Anyway, in this framing, I completely agree. The way I unknowingly started backing slowly into the whole idea of FIRE started with me realizing that I slept better with four months expenses in the bank than three, and so on. I was up to close to two years expenses sitting in my checking account before I moved anything into stocks.

[GoingConcern]

Over $100k.  I guess I am too conservative but I am holding that much because I plan to buy a house in a few years. 

I feel like I should invest it in index funds but I'm too risk adverse so I have it sitting in accounts that earn 1-1.25%.

[Baking Powder]

Always between 30 - 50k...currently at the higher end of that...mostly as a result of letting my dividends accumulate in cash. Need to reinvest some soon.

Well done. I just threw a party in my mind when I saw that my dividends in 401k crossed the 200 dollar level quarterly! I have a ways to go, but I love free money!

[CanuckExpat]

Somewhat related, if you are holding cash for longer periods, discussion of at least one option for higher interest here: http://forum.mrmoneymustache.com/reader-recommendations/credit-union-3-cds-through-end-of-year