Author Topic: How much cash do you keep on hand earning no interest?  (Read 19156 times)

TightFistedScot

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How much cash do you keep on hand earning no interest?
« on: January 27, 2017, 06:14:29 AM »
Curious as to your approach to cash that isn't earning any interest? That is, how much of an "emergency fund" is necessary? Where do you keep your emergency cash? In a regular bank account? Easily accessible stocks? Under your mattress? lol

I wonder if I really need more than 3 or 4k sitting in my bank account as an emergency cash fund. My income is relatively stable and that would be enough to cover my expenses for a couple months, and a minor house-related emergency.

My situation is unique in that nearly half of my income is guaranteed doctoral research funding paid in chunks 3x per year (each semester varies marginally, typically about 7k). The rest of my income comes from rental income, and contracts. The rental income covers the mortgage, tenants have been here nearly a year and never missed a payment.... And the other contracts usually provide me with enough to live on, but are only secure for a limited time period (for example I am currently on a teaching contract that will end in May).

I have 9k in my bank account right now earning zero interest. That is more than I need to carry me through to my next 7k instalment in the Spring.

But, I also do not want to lock the funds into a long-term investment because I have plans to do a kitchen reno within a year.

What approach would you take for this type of situation?

 

Wallerstein

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Re: How much cash do you keep on hand earning no interest?
« Reply #1 on: January 27, 2017, 06:50:02 AM »
I have around 10K in a money market fund at my local credit union earning around 0.40%.

This is enough for a 3-6 month emergency fund and where I keep my family vacation money for the upcoming year.

NoStacheOhio

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Re: How much cash do you keep on hand earning no interest?
« Reply #2 on: January 27, 2017, 06:55:39 AM »
Any money that's earmarked for spending in the short to intermediate future should just be in cash (use a CD if you know when you're going to be spending it). Beyond that, choosing your cash allocation is pretty personal. Holding 3-4k in a savings account is totally reasonable, and there are lots of people here holding way more than that.

Franklin

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Re: How much cash do you keep on hand earning no interest?
« Reply #3 on: January 27, 2017, 07:19:36 AM »
I feel uncomfortable when my checking account goes below 2K, so I usually keep it at that level.  I also have 12 months of living expenses in my savings account, a stack of 20s in my safe deposit box, and about 10K in gold bars strategically hidden. (For the inevitable banking computer failure, the currency crisis, and the zombie apocalypse:)

Rubyvroom

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Re: How much cash do you keep on hand earning no interest?
« Reply #4 on: January 27, 2017, 07:34:06 AM »
I keep $4K per CD in rolling 6 month CDs at 0.56%. So $24,000 in CDs to more than comfortably cover 6 months of an "oh shit" event. Before we FIRE (3-4 years) I plan on doubling this to $48,000 to more than comfortably cover a year.

I also have a high deductible health plan with a $5,200 family deductible, so I keep $5,200 liquid in my HSA and invest the rest.

I keep some spare cash around the house as well, but probably nothing over $500-$800 at any given time.

I keep a minimum $1K buffer in my checking account for bill paying and sweep the rest to investments once a month.

TightFistedScot

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Re: How much cash do you keep on hand earning no interest?
« Reply #5 on: January 27, 2017, 08:02:08 AM »
Thanks for your input everyone!!!

I had to google "CD".

I'm Canadian - from my very limited knowledge and 2 minute scan of google and wikipedia I don't think we have a CD.

Any Canadians know what our equivalent to a CD is? GIC?

TightFistedScot

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Re: How much cash do you keep on hand earning no interest?
« Reply #6 on: January 27, 2017, 08:03:30 AM »
I feel uncomfortable when my checking account goes below 2K, so I usually keep it at that level.  I also have 12 months of living expenses in my savings account, a stack of 20s in my safe deposit box, and about 10K in gold bars strategically hidden. (For the inevitable banking computer failure, the currency crisis, and the zombie apocalypse:)

LOL at gold bars for zombie apocalypse. Damn, you're prepared for armageddon.

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Re: How much cash do you keep on hand earning no interest?
« Reply #7 on: January 27, 2017, 08:22:21 AM »
I have about $50k in my Ally high interest savings account, but only because I plan to use it on a down payment on a house in the near (hopefully) future. Generally, I also keep $2k to $3k in my checking account earning practically no interest to cover rent and monthly bills.

I keep $4K per CD in rolling 6 month CDs at 0.56%. So $24,000 in CDs to more than comfortably cover 6 months of an "oh shit" event. Before we FIRE (3-4 years) I plan on doubling this to $48,000 to more than comfortably cover a year.

Why tie up your money in CDs at a 0.56% rate when you can just keep it in a high interest savings account like Ally? Currently at 1.00% interest rate, and easy to access.
« Last Edit: January 27, 2017, 09:05:32 AM by The 585 »

Kaspian

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Re: How much cash do you keep on hand earning no interest?
« Reply #8 on: January 27, 2017, 08:34:00 AM »
Mine was outrageous last year in this category--close to $10!  (Facepunch myself.)  I've re-arranged so it's now about $4500.  That's about the lowest I can go to dodge ATM and other bank fees.

Car Jack

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Re: How much cash do you keep on hand earning no interest?
« Reply #9 on: January 27, 2017, 08:55:05 AM »
I keep about $10k in my credit union checking account.  But I do some manufactured spending, so might owe $5k just from gift card purchases in a month.  Other money in Ally and Redneck are maybe $15k to $20k depending.

Shor

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Re: How much cash do you keep on hand earning no interest?
« Reply #10 on: January 27, 2017, 09:08:27 AM »
I feel uncomfortable when my checking account goes below 2K, so I usually keep it at that level.  I also have 12 months of living expenses in my savings account, a stack of 20s in my safe deposit box, and about 10K in gold bars strategically hidden. (For the inevitable banking computer failure, the currency crisis, and the zombie apocalypse:)

LOL at gold bars for zombie apocalypse. Damn, you're prepared for armageddon.
Considering that gold is about $1200 per ounce... you either have some very tiny bars.... or they are 99% iron, 1% gold :D
A Gold bar is worth about $500k and weighs about 27 lbs.

I retain enough buffer to handle the month to month cost of living x3 so about $3k, give or take, always in flux. The rest gets transferred in to saving.

Rubyvroom

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Re: How much cash do you keep on hand earning no interest?
« Reply #11 on: January 27, 2017, 10:01:00 AM »
Why tie up your money in CDs at a 0.56% rate when you can just keep it in a high interest savings account like Ally? Currently at 1.00% interest rate, and easy to access.

Yeah I've gone back and forth on this. I know it's not the most optimal setup.

I like the CD's because it "gates" our money. Not that we'd do anything dumb with it, but we've been known to get a wild hair and I'd rather have it somewhat difficult to access. Also, the CD's are with our bank so liquidating them is instant, whereas if I held funds with Vanguard or some other institution it sometimes takes at least a few days to move funds.

The checking account at our bank returns next to nothing, and setting up another checking account at a different institution doesn't seem worth it for like, $400 over the course of 4 years or so (I have enough accounts to track). So long story short, cuz I'm being lazy :)  If I were on a much longer timeline, I'd probably feel differently, and after FIRE I will probably rethink the whole system anyway. I think increasing to $48,000 for peace of mind will be a good plan for us, but I will have to figure out the best investment vehicle for it based on the rates at that time.

Heckler

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Re: How much cash do you keep on hand earning no interest?
« Reply #12 on: January 27, 2017, 11:08:30 AM »
Since for the past four years, my job has been teetering on layoffs, I hold $12k cash, or 6 months of job loss at current dpending rate. I keep 4k static in chequing to eliminate $14.95 monthly banking fee. I see that as a 4% return in costs saved. Then $8k in a 0.8% HIS account which is also used as my float for large purchases such as VAB, VCN, VTI or property taxes/home insurance.

I also have a BIG emergency fund in $21k VSB short term bonds in TFSA that is my next source if absolutely needed.  Its lost a couple hundred, but not enough to be concerning. 
« Last Edit: January 27, 2017, 02:01:27 PM by Heckler »

JAYSLOL

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Re: How much cash do you keep on hand earning no interest?
« Reply #13 on: January 27, 2017, 12:40:28 PM »
All these forms of savings have very different purposes.  Personally I keep ~$200 on me in cash, ~$1000 in cash at home for emergencies or to take advantage of a deal on something used.  I usually have between $1 and $3k in my saving/checking account (earning .8%) as my fund for paying bills and expenses.  Everything else goes into the market.  Not sure how gold is going help in the zombie apocalypse, lol, but my chainsaw might come in very handy :)

2Birds1Stone

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Re: How much cash do you keep on hand earning no interest?
« Reply #14 on: January 27, 2017, 12:44:30 PM »
I have too much cash, but at least it sits in a 1% APY account or is used to churn bank sign up bonuses.

marty998

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Re: How much cash do you keep on hand earning no interest?
« Reply #15 on: January 27, 2017, 12:56:16 PM »
I win guys. Aussie banks have a special type of transaction account called an Offset.

It takes the balance in your transaction account and offsets a mortgage account, reducing the notional principal that interest is calculated on.

You basically "earn" your mortgage rate (4.26% for me), tax free to boot. I keep between $5-$15k in there depending on cash flow needs each month.

I'm a red panda

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Re: How much cash do you keep on hand earning no interest?
« Reply #16 on: January 27, 2017, 01:00:57 PM »
I think we have about $60 in the house that is not earning interest.

We have $40k in checking accounts ($20k each) earning 2.25% interest. 

We don't do CDs anymore since the rates are so freaking low.

Franklin

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Re: How much cash do you keep on hand earning no interest?
« Reply #17 on: January 27, 2017, 01:53:52 PM »
I feel uncomfortable when my checking account goes below 2K, so I usually keep it at that level.  I also have 12 months of living expenses in my savings account, a stack of 20s in my safe deposit box, and about 10K in gold bars strategically hidden. (For the inevitable banking computer failure, the currency crisis, and the zombie apocalypse:)

LOL at gold bars for zombie apocalypse. Damn, you're prepared for armageddon.
Considering that gold is about $1200 per ounce... you either have some very tiny bars.... or they are 99% iron, 1% gold :D
A Gold bar is worth about $500k and weighs about 27 lbs.

I retain enough buffer to handle the month to month cost of living x3 so about $3k, give or take, always in flux. The rest gets transferred in to saving.

Nahhh, they are just the 1 ouncers like this http://www.apmex.com/product/60162/1-oz-gold-bar-apmex-in-tep-package . They still call them gold bars though.

Heckler

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Re: How much cash do you keep on hand earning no interest?
« Reply #18 on: January 27, 2017, 02:00:21 PM »
1 ouncers - small enough to throw at zombies.

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Re: How much cash do you keep on hand earning no interest?
« Reply #19 on: January 27, 2017, 02:04:00 PM »
1 ouncers - small enough to throw at zombies.

Seems expensive for that use. A bucket of golfballs might be a better "investment".

Franklin

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Re: How much cash do you keep on hand earning no interest?
« Reply #20 on: January 27, 2017, 02:15:11 PM »
1 ouncers - small enough to throw at zombies.

Hah!  All kidding aside, I'm blessed with a decent financial position, so I can indulge my worst fears.  So I have a little bit of gold in case the green back fails.  Zombies would just make it awesome:)

RichMoose

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Re: How much cash do you keep on hand earning no interest?
« Reply #21 on: January 27, 2017, 02:19:17 PM »
Thanks for your input everyone!!!

I had to google "CD".

I'm Canadian - from my very limited knowledge and 2 minute scan of google and wikipedia I don't think we have a CD.

Any Canadians know what our equivalent to a CD is? GIC?

Similar to a short term GIC. The closest account would be called a Term Deposit in Canada.

I keep about $5k on hand typically. But I have a safe job, my wife has a safer job, and we can easily live off one income.

Shor

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Re: How much cash do you keep on hand earning no interest?
« Reply #22 on: January 27, 2017, 02:36:52 PM »
I feel uncomfortable when my checking account goes below 2K, so I usually keep it at that level.  I also have 12 months of living expenses in my savings account, a stack of 20s in my safe deposit box, and about 10K in gold bars strategically hidden. (For the inevitable banking computer failure, the currency crisis, and the zombie apocalypse:)

LOL at gold bars for zombie apocalypse. Damn, you're prepared for armageddon.
Considering that gold is about $1200 per ounce... you either have some very tiny bars.... or they are 99% iron, 1% gold :D
A Gold bar is worth about $500k and weighs about 27 lbs.

I retain enough buffer to handle the month to month cost of living x3 so about $3k, give or take, always in flux. The rest gets transferred in to saving.

Nahhh, they are just the 1 ouncers like this http://www.apmex.com/product/60162/1-oz-gold-bar-apmex-in-tep-package . They still call them gold bars though.
Hey look at that! I was hoping for a whole shipment of 99% iron bars getting lugged around and buried throughout the park..

cchrissyy

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Re: How much cash do you keep on hand earning no interest?
« Reply #23 on: January 27, 2017, 03:18:06 PM »
about 1 month's worth of expenses, earning next to nothing in a checking account

DailyGrindFree

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Re: How much cash do you keep on hand earning no interest?
« Reply #24 on: January 27, 2017, 05:23:43 PM »
I have been keeping 25K-30K in my checking account lately. It is there so if there is an investment opportunity or unexpected event I have money available.

kpd905

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Re: How much cash do you keep on hand earning no interest?
« Reply #25 on: January 27, 2017, 07:13:35 PM »
I keep $15,000 in cash that I move around to hit savings account bonuses.  Last year we used it for 2 Chase bonuses and one BMO Harris bonus for $600 total.  I should hit four of them this year for $800.

matchewed

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Re: How much cash do you keep on hand earning no interest?
« Reply #26 on: January 27, 2017, 07:46:57 PM »
It just depends on the goals. Right tools for the right outcomes.

2Birds1Stone

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Re: How much cash do you keep on hand earning no interest?
« Reply #27 on: January 27, 2017, 07:53:54 PM »
I keep $15,000 in cash that I move around to hit savings account bonuses.  Last year we used it for 2 Chase bonuses and one BMO Harris bonus for $600 total.  I should hit four of them this year for $800.

There are some great checking account bonuses that you could trigger DD deposits for with an ACH push from one of your savings account. I hit $2,500 in bonuses since August just by following www.doctorofcredit.com 's "best bank bonuses of X month" page.

rickhuizinga

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Re: How much cash do you keep on hand earning no interest?
« Reply #28 on: January 27, 2017, 11:35:29 PM »
I've divided the cash reserve up into 3 traunches.  The first traunch is in a 1% checking account.  The next traunch, less likely to be drawn upon, is in an ultra-short term (2-3 month) bond ETF (MINT, 1.35% dividend).  The final "overflow" traunch, least likely to be drawn upon, is another longer duration (2 year), bond ETF (LDUR, 1.89% dividend).

My daily spending is from the checking account.  If it runs low, I sell enough of the second traunch to cover upcoming cash flow needs.  In case of emergency, and I need a more substantial amount of cash, then the option of dipping into the third traunch is available.

As income is accumulated, first the checking account is replenished. The overflow goes into the second traunch. Once that is full, the remaining overflow goes into the third traunch.
« Last Edit: January 29, 2017, 11:19:41 AM by rickhuizinga »

Monocle Money Mouth

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Re: How much cash do you keep on hand earning no interest?
« Reply #29 on: January 28, 2017, 02:32:59 AM »
I keep as little as possible in non-interest bearing accounts. I usually have between $500 and $2000 in checking and I only have $2000 in the account when I am getting close to paying bills. Everything else gets shuffled to online savings accounts.

boarder42

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Re: How much cash do you keep on hand earning no interest?
« Reply #30 on: January 28, 2017, 03:59:03 AM »
I keep as close to 0/ negative as possible between my checking and credit card due. Everything else is invested.  Have a big ticket purchase coming up that I will double my money on so my cash is slightly growing for that. But that's really an investment. No market returns will do 100% ROI in 2 months.

Why - BC the downside risk plus having to withdraw is much smaller than the upside potential. 

What - do I do if big unexpected expenses come up.
1. Pay with a credit card
2. Halt taxable contribution
3. Halt Roth contribution
4. Halt 401k contribution.
5. Sell equities if necessary.

Never made it past halt taxable. Which is 2k per month.

2Birds1Stone

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Re: How much cash do you keep on hand earning no interest?
« Reply #31 on: January 28, 2017, 04:18:18 AM »
I keep as close to 0/ negative as possible between my checking and credit card due. Everything else is invested.  Have a big ticket purchase coming up that I will double my money on so my cash is slightly growing for that. But that's really an investment. No market returns will do 100% ROI in 2 months.

Why - BC the downside risk plus having to withdraw is much smaller than the upside potential. 

What - do I do if big unexpected expenses come up.
1. Pay with a credit card
2. Halt taxable contribution
3. Halt Roth contribution
4. Halt 401k contribution.
5. Sell equities if necessary.

Never made it past halt taxable. Which is 2k per month.

I wish I had the balls to do this! Missed out on quite a bit of market appreciation due to analysis paralysis.

boarder42

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Re: How much cash do you keep on hand earning no interest?
« Reply #32 on: January 28, 2017, 04:25:41 AM »
I keep as close to 0/ negative as possible between my checking and credit card due. Everything else is invested.  Have a big ticket purchase coming up that I will double my money on so my cash is slightly growing for that. But that's really an investment. No market returns will do 100% ROI in 2 months.

Why - BC the downside risk plus having to withdraw is much smaller than the upside potential. 

What - do I do if big unexpected expenses come up.
1. Pay with a credit card
2. Halt taxable contribution
3. Halt Roth contribution
4. Halt 401k contribution.
5. Sell equities if necessary.

Never made it past halt taxable. Which is 2k per month.

I wish I had the balls to do this! Missed out on quite a bit of market appreciation due to analysis paralysis.

Don't over think it. Just halting the auto invests is worth 6k per month. Meaning I can get close to 12k just by halting these. And don't forget even selling for a slight loss isn't awful you'll be able to deduct losses.

I don't understand the but what if I have to sell for a loss mentality. The chances of that are so small.

People should be asking but what about all those missed compounded gains.

I think I've seen the ratio quoted at 70/30 gains to losses with the market at all time highs.

brooklynmoney

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Re: How much cash do you keep on hand earning no interest?
« Reply #33 on: January 28, 2017, 07:55:37 AM »
This is a good reminder I have way too much sitting in checking and savings. And then when I went to take advantage of dips in the market I have to call Vanguard and beg them to process my trade even though the $ hasn't cleared yet ha.

dreams_and_discoveries

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Re: How much cash do you keep on hand earning no interest?
« Reply #34 on: January 28, 2017, 08:40:38 AM »
To answer the original question: Zero. My current account pays 1.5% (used to be 3%, but times are changing).

I keep between £20k and £100 in my current account, as I get money in quarterly. I have enough income to bankroll any serious emergencies by simply reducing taxable investing that month - similar to boarder42 below, my flowchart is
  • Expense Under £500 - can easily cover
  • Expense Under £4k - reduce taxable investing
  • Expense Under £15k - empty P2P
  • Expense Greater than £15k - sell taxable stocks
  • Serious Financial Issues - sell ISA stocks

It would take a loss of income, rather than an expense to cause be to reduce pension contributions, they are so tax efficient.

Retire-Canada

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Re: How much cash do you keep on hand earning no interest?
« Reply #35 on: January 28, 2017, 08:42:54 AM »
Curious as to your approach to cash that isn't earning any interest? That is, how much of an "emergency fund" is necessary? Where do you keep your emergency cash? In a regular bank account? Easily accessible stocks? Under your mattress? lol
 

My emergency fund [EF] = $0 so I don't worry about the lost interest. ;) I invest all my money and use a LOC [not tied to home equity] as my EF.

I can't remember the last time I actually had an emergency, but I would do something similar to Boarder42 except using my LOC before selling any investments.

If I have a kitchen reno planned in a year what I would do is invest the money because in all likelihood it will be worth more a year from now and I'm not rich enough to have money sitting on the sidelines not working for me. Now you may ask what if the market crashes? Sure that could happen and in that case I would put off the kitchen reno as well as any other non-essential spending and buy as much additional investments as I could. To me a kitchen reno is not vital so if it waits a bit that's not an issue. On the other hand if the market goes up like it usually does I'd be that much closer to my FIRE goals and have the money for the reno.

If you cannot put off the kitchen reno and it's a year or less away throw that money in a high interest savings account and don't worry about the lost returns/inflation.

SpareChange

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Re: How much cash do you keep on hand earning no interest?
« Reply #36 on: January 28, 2017, 01:37:32 PM »
My emergency fund [EF] = $0 so I don't worry about the lost interest. ;) I invest all my money and use a LOC [not tied to home equity] as my EF.

I can't remember the last time I actually had an emergency, but I would do something similar to Boarder42 except using my LOC before selling any investments.

Ditto. Last year my car died suddenly and I was put to this kind of stress test. I ended up spending around $6k in a few short days. I keep 1500-2000 in checking. I paid for the "new" used car with my credit card, suspended investing and put that money into cash. When my card balance deducted from my checking account, it overdrafted by about 600 or so, which was automatically picked up by my LOC. I paid it off with the next paycheck. Total interest was like 23 cents. 

kpd905

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Re: How much cash do you keep on hand earning no interest?
« Reply #37 on: January 28, 2017, 01:51:32 PM »
I keep $15,000 in cash that I move around to hit savings account bonuses.  Last year we used it for 2 Chase bonuses and one BMO Harris bonus for $600 total.  I should hit four of them this year for $800.

There are some great checking account bonuses that you could trigger DD deposits for with an ACH push from one of your savings account. I hit $2,500 in bonuses since August just by following www.doctorofcredit.com 's "best bank bonuses of X month" page.

I do those as well.  I actually do real direct deposits for most because it is really easy for me to change my direct deposit at work.  We had $600 in savings bonuses and $1300 in checking bonuses last year.  I should easily beat those numbers this year.

Doctor of Credit is great, and if anyone is interested in an easy bonus, grab the $250 Wells Fargo checking bonus.  Open the account while loading $50 from a credit card, make 10 debit transactions, get $250.  Then close the account.

2Birds1Stone

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Re: How much cash do you keep on hand earning no interest?
« Reply #38 on: January 28, 2017, 04:19:58 PM »
I keep $15,000 in cash that I move around to hit savings account bonuses.  Last year we used it for 2 Chase bonuses and one BMO Harris bonus for $600 total.  I should hit four of them this year for $800.

There are some great checking account bonuses that you could trigger DD deposits for with an ACH push from one of your savings account. I hit $2,500 in bonuses since August just by following www.doctorofcredit.com 's "best bank bonuses of X month" page.

I do those as well.  I actually do real direct deposits for most because it is really easy for me to change my direct deposit at work.  We had $600 in savings bonuses and $1300 in checking bonuses last year.  I should easily beat those numbers this year.

Doctor of Credit is great, and if anyone is interested in an easy bonus, grab the $250 Wells Fargo checking bonus.  Open the account while loading $50 from a credit card, make 10 debit transactions, get $250.  Then close the account.

Just did this yesterday lol

TightFistedScot

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Re: How much cash do you keep on hand earning no interest?
« Reply #39 on: January 29, 2017, 07:40:27 AM »
Curious as to your approach to cash that isn't earning any interest? That is, how much of an "emergency fund" is necessary? Where do you keep your emergency cash? In a regular bank account? Easily accessible stocks? Under your mattress? lol
 

My emergency fund [EF] = $0 so I don't worry about the lost interest. ;) I invest all my money and use a LOC [not tied to home equity] as my EF.

I can't remember the last time I actually had an emergency, but I would do something similar to Boarder42 except using my LOC before selling any investments.

If I have a kitchen reno planned in a year what I would do is invest the money because in all likelihood it will be worth more a year from now and I'm not rich enough to have money sitting on the sidelines not working for me. Now you may ask what if the market crashes? Sure that could happen and in that case I would put off the kitchen reno as well as any other non-essential spending and buy as much additional investments as I could. To me a kitchen reno is not vital so if it waits a bit that's not an issue. On the other hand if the market goes up like it usually does I'd be that much closer to my FIRE goals and have the money for the reno.

If you cannot put off the kitchen reno and it's a year or less away throw that money in a high interest savings account and don't worry about the lost returns/inflation.

Thanks for the input. This is more my style. Because of my particular situation with low-ish income and ridiculous cost of living/housing prices in Toronto, it is difficult to save despite being really frugal. Since starting my PhD 2.5 years ago I haven't saved much. So I was thinking even modest returns would do me well.

And you're right, the kitchen reno is certainly not necessary. And not even a definite plan right now. I would only do it to sell my house to get a higher price, and because I will do a lot of the reno myself and it will be a fun project. I currently have tenants in the unit that needs a new kitchen anyway.
« Last Edit: January 29, 2017, 07:46:01 AM by TightFistedScot »

tallen

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Re: How much cash do you keep on hand earning no interest?
« Reply #40 on: January 29, 2017, 03:45:49 PM »
I like to keep around $5k easily accessible ($2k of that is earning 5% in Netspend and Brinks accounts so around $3k or so not earning anything). It starts getting over $6-$7k I sock it somewhere earning something. If I need it for something (like the dental work I'm spending it on at the moment) and it dips below $3k I start getting stressed out (even though I have other less accessible funds I could tap if I needed too), I don't know how I ever lived paycheck to paycheck when I was younger, I get down to a months worth of expenses in checking/savings and damn near have a panic attack lol.

GreatLaker

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Re: How much cash do you keep on hand earning no interest?
« Reply #41 on: January 29, 2017, 06:17:24 PM »
Have you considered an online bank to get better rates? EQ Bank currently pays 2% and is CDIC guaranteed. Several others pay 1.5% or higher. Tangerine's standard rate is 0.8%, but regularly offers 2% or better for new accounts, or even retention offers if you call them up and ask nicely.

https://www.highinterestsavings.ca/chart/
https://www.ratesupermarket.ca/bank_accounts/results?location=&province_id=5&lat=43.6404&lng=-79.3995&level=&display_locale=&type=savings&deposit=1000

Mr Mark

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Re: How much cash do you keep on hand earning no interest?
« Reply #42 on: January 29, 2017, 09:57:37 PM »
"Re: How much cash do you keep on hand earning no interest?"

As little as logistics allow (enough to ensure mortgage and condo fees get paid even if there are screw ups transferring cash, some for maintenance on rentals, a bit of cash float in various countries for small gifts to semi-dependants, etc), but it's still too much. I'm just too busy and lazy to work to get it down to a more 'just in time' thing right now.

I think the whole 'you must first have at least 3-4 months of expenses in cash/emergency fund' thing is a load of complainypants BS that just encourages cash hoarding and spending, fear of dropping into stocks regularly, and market timing. I prefer the solutions of many earlier posts wrt LOC and credit cards (I guess I have about $35k credit limits spread over 2 cards?)  to be able to deploy if shit hits the fan.

Aggie1999

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Re: How much cash do you keep on hand earning no interest?
« Reply #43 on: January 29, 2017, 10:51:19 PM »
This is a good reminder I have way too much sitting in checking and savings. And then when I went to take advantage of dips in the market I have to call Vanguard and beg them to process my trade even though the $ hasn't cleared yet ha.

I thought Vanguard automatically went ahead and made the purchase while the transfer from the linked bank account was in progress. Not correct?

Metric Mouse

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Re: How much cash do you keep on hand earning no interest?
« Reply #44 on: January 29, 2017, 11:25:09 PM »
This is a good reminder I have way too much sitting in checking and savings. And then when I went to take advantage of dips in the market I have to call Vanguard and beg them to process my trade even though the $ hasn't cleared yet ha.

I thought Vanguard automatically went ahead and made the purchase while the transfer from the linked bank account was in progress. Not correct?
Could depend upon the type of account or fund one is buying into.

TightFistedScot

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Re: How much cash do you keep on hand earning no interest?
« Reply #45 on: January 31, 2017, 05:37:25 AM »
Thanks for the discussion folks.

I got my no-interest checking account down to 5k by making another RRSP contribution (in Vanguard ETF shares for the long-term).

5k is enough for me to feel comfortable and not worry about any emergencies before my next big funding payday in May. And like others have said, if for some reason I needed access to more funds in March or April, I've got a few credit cards to tide me over.

2Birds1Stone

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Re: How much cash do you keep on hand earning no interest?
« Reply #46 on: January 31, 2017, 06:40:44 AM »

Don't over think it. Just halting the auto invests is worth 6k per month. Meaning I can get close to 12k just by halting these. And don't forget even selling for a slight loss isn't awful you'll be able to deduct losses.

I don't understand the but what if I have to sell for a loss mentality. The chances of that are so small.

People should be asking but what about all those missed compounded gains.

I think I've seen the ratio quoted at 70/30 gains to losses with the market at all time highs.

You've motivated me! I have been chipping away at those #'s sitting in sweep account and going in heavy on VTI/VXUS.....brace yourself for a correction any day now.

Guide2003

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Re: How much cash do you keep on hand earning no interest?
« Reply #47 on: January 31, 2017, 11:04:06 AM »
I keep as little as possible in non-interest bearing accounts. I usually have between $500 and $2000 in checking and I only have $2000 in the account when I am getting close to paying bills. Everything else gets shuffled to online savings accounts.
+1

With tons of unused credit in plastic form, various ROTH investments that I can tap contributions to, and plenty of tools, guns, and life skills for everything else in life that MasterCard can't buy, there's no reason to have cash drag that I can see. I'm lazy so I keep enough cash so I don't have to worry that the automatic, full-balance payments on my credit cards will clear, but other than that I have no use for backup funds.

Admittedly, I'm a government employee with great job security and healthcare, but I would image anyone in a salaried position with some investments would feel the same way.

Retire-Canada

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Re: How much cash do you keep on hand earning no interest?
« Reply #48 on: January 31, 2017, 11:41:10 AM »
Admittedly, I'm a government employee with great job security and healthcare, but I would image anyone in a salaried position with some investments would feel the same way.

FWIW - I am a consultant who can be terminated at any time with no benefits or job security and I feel the same way. Money invested will very quickly give you more security than a cash EF. Since we are planning for many decades of FIRE our EF plans should acknowledge that fact.

the_fella

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Re: How much cash do you keep on hand earning no interest?
« Reply #49 on: January 31, 2017, 11:54:45 AM »
I keep no cash immediately "on hand", for reasons. But I have accounts of various liquidity. My primary savings account has a 1% APY, and is with Ally. It is about as liquid as I get. I have just over $4,000 in there. I have another $1,000 in a savings account tied to a NetSpend card. It is somewhat less liquid (it will take time to transfer the money out without incurring a fee). I have this account solely because of the 5% APY (paid out quarterly). Sadly, it is only for balances of $1,000 or less, which makes me sad. I'm considering opening similar accounts with other companies like Brinks, et al. If I went that route, I'd probably want to keep about $2,000 in my Ally account.