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Aminatidi
Posted: 21 April 2024 08:42:15(UTC)
#15

Joined: 29/01/2018(UTC)
Posts: 5,866
6-7 months of living expenses is £6-7K basically.

I invest around £2k/month from income though sometimes it's £2K one month and nothing the next month then £4K the next month but either way it gets invested.

I'm pretty much fine with keeping the NS&I linkers until they expire.

I'm pretty much fine with the current account balance as the £2K minimum is a totally arbitrary limit I set on it that I just don't let it dip under.

So really it's what the minimum is that I'd let that £20K run down to.

Tempted to run it down to £10K and go from there.
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Jay P
Posted: 21 April 2024 08:51:54(UTC)
#16

Joined: 25/08/2023(UTC)
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Tend to measure everything nowadays against 'annual required income' and happy with 6 months reserve on instant access. So, just shy of £20k in your case.

Not to say cash/ near cash can't or doesn't figure within overall investments but that varies from nil to a lot.

Known/ planned large discretionary expenditures are anticipated up to a year in advance and capital is released to suit the market.

Have occasionally asked myself what the 6 month reserve is actually for- haven't really found an answer beyond 'unknowns'.
Maybe it's a fear of ever being totally skint again. Too old to overthink it now though.
No credit cards.
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1 user thanked Jay P for this post.
Dexi on 21/04/2024(UTC)
Harry Gloom
Posted: 21 April 2024 08:52:43(UTC)
#20

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I'm in the final work year before retirement and we have £15K in an instant access cash ISA emergency fund. At the point of retirement drawdown, starting April 2025, in addition to the £15K emergency fund we will have £80K cash inside DC pension, earning BOE base rate of 5.25% (currently) with no fees, which equates to around 3 years of drawdown for living expenses. Plus we will have a current account float of £5K.

At start of drawdown, overall, including the emergency fund we will be around 17% cash and 83% invested in Global, US and Tech index funds with around 17% of annual expenses covered by a DB pension already in payment. No bonds or bond funds.

I plan to review the cash balance percentage as we roll through the first years of retirement and see how it goes but I am happy knowing that I can avoid drawing equity funds for drawdown needs and just use the cash for 3 years if I had to.

Market wobbles like this week where our portfolio drops £13K in 5 days makes me glad I am building that cash pile.
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2 users thanked Harry Gloom for this post.
Mostly Retired on 21/04/2024(UTC), DHardisty on 05/06/2024(UTC)
Aminatidi
Posted: 21 April 2024 08:55:03(UTC)
#17

Joined: 29/01/2018(UTC)
Posts: 5,866
Jay P;303207 wrote:
Have occasionally asked myself what the 6 month reserve is actually for- haven't really found an answer beyond 'unknowns'.


Pretty much sums it up.

I suppose it's why it's called an emergency fund but it does also seem like wasted opportunity if it's too much of a fund.
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Jay P
Posted: 21 April 2024 09:08:03(UTC)
#19

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Aminatidi;303209 wrote:
Jay P;303207 wrote:
Have occasionally asked myself what the 6 month reserve is actually for- haven't really found an answer beyond 'unknowns'.


Pretty much sums it up.

I suppose it's why it's called an emergency fund but it does also seem like wasted opportunity if it's too much of a fund.

Yep. Just edited that post to suggest it might simply be pandering to a fear of ever being skint again. It's big enough to do the job (personally) but not too big to be a millstone (personally).
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Elspeth Beaton
Posted: 21 April 2024 09:47:16(UTC)
#21

Joined: 11/12/2019(UTC)
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21 years retired so been there for a “bit”!-now 78 years old
Keep 2+ years living expenses in cash -in a high interest bank account-earning up to £1000 tax free interest and rest in instant access cash ISAs
Of course I also have a portfolio with a 60% Bond allocation as a back up
Just my choice so I sleep at night
There are many different successful ways usually determined by how much you have managed to accumulate and your personal ability to cope with risk and volatility
A retiree is in a very different mindset from a worker and preservation of those vital retirement savings is paramount however which way you do it
100% success rate however is mandatory !
xxd09
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4 users thanked Elspeth Beaton for this post.
Busy doing nothing on 21/04/2024(UTC), D Bergman on 21/04/2024(UTC), Dentmaster on 21/04/2024(UTC), Harland Kearney on 21/04/2024(UTC)
D Bergman
Posted: 21 April 2024 10:07:47(UTC)
#18

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Aminatidi;303209 wrote:
Jay P;303207 wrote:
Have occasionally asked myself what the 6 month reserve is actually for- haven't really found an answer beyond 'unknowns'.


Pretty much sums it up.

I suppose it's why it's called an emergency fund but it does also seem like wasted opportunity if it's too much of a fund.


You’ll think is a wasted opportunity until you need it.
In my case, a car hitting our son 6 months ago, resulting in major brain trauma.
Specialist rehab is costing over £1.5K per month, and helping him a great deal.

The fact that I had the cash to hand made it a lot easier.
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15 users thanked D Bergman for this post.
SF100 on 21/04/2024(UTC), Rookie Investor on 21/04/2024(UTC), Jay P on 21/04/2024(UTC), Guest on 21/04/2024(UTC), Dentmaster on 21/04/2024(UTC), Busy doing nothing on 21/04/2024(UTC), ANDREW FOSTER on 21/04/2024(UTC), bearcub on 21/04/2024(UTC), lenahan on 22/04/2024(UTC), MBA MBA on 22/04/2024(UTC), Mostly Retired on 22/04/2024(UTC), Raj K on 22/04/2024(UTC), Wave Action on 22/04/2024(UTC), RT7 on 29/04/2024(UTC), DHardisty on 05/06/2024(UTC)
Aminatidi
Posted: 21 April 2024 10:14:51(UTC)
#22

Joined: 29/01/2018(UTC)
Posts: 5,866
Very sorry to hear that and hopefully he's making good progress.

I think it's a good example of never knowing what's around the corner but I also don't know where you draw the line at planning for whatever unknowns could be around the corner?

Without wanting to pry or sound like a stalker I've always got the impression in terms of number of 0's that you're one of the better off posters on here.

Did you literally need that cash there and then or would "just sell some units" have also worked?

That's what I'm slightly grappling with.

Sleep at night because it's there if I need it v how likely I am to ever need to lay my hands on that kind of sum that quickly.

Best of luck with your son 👍🏻
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2 users thanked Aminatidi for this post.
D Bergman on 21/04/2024(UTC), Busy doing nothing on 21/04/2024(UTC)
SF100
Posted: 21 April 2024 10:50:02(UTC)
#24

Joined: 08/02/2020(UTC)
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No need to overthink things.
I just hold as much as makes me feel comfortable and/or don't want to lose.
It can fluctuate depending on whether better value elsewhere; there lies the problem.
Life (c.f this forum) isn't a competition to see how much you can invest in the stockmarket.

3yrs comfortable expenses sounds about right to me.
It's conceivable (to me) that one could end up unemployed for that length.
ie major recession.

Sorry to hear about Mr Bergman's son; serves as a timely reminder not to get too bullish with finances.
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4 users thanked SF100 for this post.
Rookie Investor on 21/04/2024(UTC), Jay P on 21/04/2024(UTC), Dentmaster on 21/04/2024(UTC), Busy doing nothing on 21/04/2024(UTC)
Rookie Investor
Posted: 21 April 2024 10:56:16(UTC)
#25

Joined: 09/12/2020(UTC)
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When markets are bullish and going higher, the concern is too much cash.

When markets are bearish and going low, the concern is too much stocks.

I hold enough cash for short-medium term liabilities I know about plus a bit more plus defensives to suit my risk tolerance.

Holding cash as part of your defensive allocation to suit risk tolerance is not a bad place to be currently given the yield curve but you do run into reinvestment risk so having some longer dated bonds is fine (I hold via WP funds).
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4 users thanked Rookie Investor for this post.
SF100 on 21/04/2024(UTC), Dentmaster on 21/04/2024(UTC), Dexi on 21/04/2024(UTC), MBA MBA on 22/04/2024(UTC)
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