Cash Reserves

24 replies [Last post]
SometimesNowhere's picture
Joined: 2008-12-22

Just curious how much you guys keep in your personal liquid reserves in percent of annual projected income or months of income. I am trying to build an adequate reserve, but not too much. It's a bit harder because our income, especially in the first few years, can be so volatile. Any thoughts?

HymanRoth's picture
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Joined: 2008-08-25

At LEAST 6 months worth of your basic expenses....

BondGuy's picture
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Joined: 2006-09-21

+1 on at least six months.
 
I know of a situation where an advisor was, for all intents and purposes, benched by her wirehouse employer. She wanted out, they wouldn't let out of her contract. Because of the poisonous situation at the office her attorney advised her to stay out of the office while they worked things out. Though she had another advisor minding her book not enough gross was generated to give her a paycheck. It took 18 months to work it out and for her to land at another firm. That's 18 months without a paycheck.
 
Think about that, in a world were sh*t happens, sh*t happened. Ugly, and she landed on her feet, but she had to float herself, single mom, 400k producer, upper middle class lifestyle, for 18 months. Hats of to her and a lesson to us all on just how bad things can get.

deekay's picture
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Joined: 2007-05-15

Although I'm not there yet, my goal is to have 6 months of my gross income saved up in liquid, safe investments (MMF, CSV of WL insurance, savings, checking).

Moraen's picture
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Joined: 2009-01-22

Ice is right on. Twelve months of your budget.

BerkshireBull's picture
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Joined: 2009-06-10

What do you guys invest your reserves in?  I currently have ING & HSBC Direct for about 3 months of my very low expenses but I'm only getting 1.4 and 1.55%.  I was thinking about plopping some in FLDAX or PBSMX.  Anyone have any safe bond funds they like for this use?

deekay's picture
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Joined: 2007-05-15

High Early Cash Value WL insurance.
 
edit:  along with the usual suspects, of course.

Moraen's picture
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Joined: 2009-01-22

CD's so that one month is always maturing.

BerkshireBull's picture
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Joined: 2009-06-10

Moraen wrote:CD's so that one month is always maturing.

How much are you putting into each CD? 1 month of living expenses or more or less?  Are you doing 6 or 12 month CDs?

voltmoie's picture
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Joined: 2008-11-05

I use a short duration bond fund

N.D.'s picture
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Joined: 2009-07-13

My idea of emergency money is cash available 24/7. I keep mine in small rocks of crack.

BerkshireBull's picture
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Joined: 2009-06-10

voltmoie wrote:I use a short duration bond fund
Which fund?  I'm looking for ideas.

BerkshireBull's picture
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Joined: 2009-06-10

iceco1d wrote:Goldman Short Duration Tax-FreeThat looks really solid.  Not a negative quarter since Q1 2005 and no negative years in the last 10.  Thanks for the tip.

voltmoie's picture
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Joined: 2008-11-05

That's what I use as well.  Truth be told I keep 50% in cash, 50% in the fund.Also have a large credit line in case I need a heart transplant and only have 24 hours to pay for it.

Moraen's picture
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Joined: 2009-01-22

voltmoie wrote: That's what I use as well.  Truth be told I keep 50% in cash, 50% in the fund.Also have a large credit line in case I need a heart transplant and only have 24 hours to pay for it.

How old ARE you volt?!

BerkshireBull's picture
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Joined: 2009-06-10

Moraen wrote: voltmoie wrote: That's what I use as well.  Truth be told I keep 50% in cash, 50% in the fund.Also have a large credit line in case I need a heart transplant and only have 24 hours to pay for it. How old ARE you volt?!

I'd guess mid to late 50s

voltmoie's picture
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Joined: 2008-11-05

Haha .. Early 30s

Call me grandpa!

BerkshireBull's picture
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Joined: 2009-06-10

voltmoie wrote:Call me grandpa!

Is that what you tell the freshmen girls at the College Campus in your town when you "doorknock" the co-ed dormatories?

voltmoie's picture
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Joined: 2008-11-05

BerkshireBull wrote:voltmoie wrote:Call me grandpa!

Is that what you tell the freshmen girls at the College Campus in your town when you "doorknock" the co-ed dormatories?daddy ... and I do live in a college town

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