Cash Reserves

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Jul 27, 2009 11:05 am

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?

Jul 27, 2009 11:46 am

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

Jul 27, 2009 12:32 pm

+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.
Jul 27, 2009 6:48 pm

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).

Jul 27, 2009 6:58 pm

Ice is right on. Twelve months of your budget.

Jul 27, 2009 8:08 pm

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?

Jul 27, 2009 10:15 pm

High Early Cash Value WL insurance.

 
edit:  along with the usual suspects, of course.
Jul 28, 2009 8:28 am

CD's so that one month is always maturing.

Jul 28, 2009 1:37 pm
Moraen:

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?
Jul 28, 2009 11:52 pm

I use a short duration bond fund

Jul 29, 2009 12:56 am

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

Jul 29, 2009 9:19 am
voltmoie:

I use a short duration bond fund



Which fund?  I'm looking for ideas.

Jul 29, 2009 9:58 am
iceco1d:

Goldman Short Duration Tax-Free



That looks really solid.  Not a negative quarter since Q1 2005 and no negative years in the last 10.  Thanks for the tip.

Jul 29, 2009 10:04 am

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.

Jul 29, 2009 10:52 am
voltmoie:

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?!

Jul 29, 2009 11:26 am
Moraen:
voltmoie:

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
Jul 29, 2009 12:48 pm

Haha .. Early 30s



Call me grandpa!

Jul 29, 2009 4:10 pm
voltmoie:



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?
Jul 29, 2009 5:08 pm
BerkshireBull:
voltmoie:



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