How much is too much in liquid savings - debate with husband.

[Anonymous]

We have enough in high yield accounts to cover 12-18 months of expenses. If the equity markets have a big correction this should help us ride it out without having to sell. Yes, this is a conservative approach. We are retired if that helps.

[Anonymous]

That would drive me crazy having that $ rotting in a savings account. But maybe just agree to cap it at $100k and then aggressively invest anything on top of that - sounds like your husband is dug in and some fights aren’t worth it.

[Anonymous]

Anonymous wrote:That would drive me crazy having that $ rotting in a savings account. But maybe just agree to cap it at $100k and then aggressively invest anything on top of that - sounds like your husband is dug in and some fights aren’t worth it.

It's all relative, though. You may have $100k in cash equivalents like treasuries earning 3% tax-free, but $3m in equities between your retirement and brokerage, in which case you are 3.3% cash, 96.6% equities, which is still plenty aggressive.

[Anonymous]

Do you have a separate emergency fund or is the $100k savings essentially that? If so, I'd keep it pretty liquid and safe (hysa or money market). We've elected to be more conservative with our surplus funds at the moment given the incredible global insecurity.

[Anonymous]

Anonymous wrote:Do you have a separate emergency fund or is the $100k savings essentially that? If so, I'd keep it pretty liquid and safe (hysa or money market). We've elected to be more conservative with our surplus funds at the moment given the incredible global insecurity.

The $100K savings is essentially that. We bought our house somewhat recently and a new car shortly after that. Aside from home repairs, aren’t anticipating huge expenses soon.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Do you have a separate emergency fund or is the $100k savings essentially that? If so, I'd keep it pretty liquid and safe (hysa or money market). We've elected to be more conservative with our surplus funds at the moment given the incredible global insecurity.

The $100K savings is essentially that. We bought our house somewhat recently and a new car shortly after that. Aside from home repairs, aren’t anticipating huge expenses soon.

You need some cash reserves to cover debt service and living expenses in the event of a catastrophe. Figure out how many months of expenses you need to feel comfortable. Some people have an open HELOC or other line of credit to cover emergencies, while others want cash reserves.

[Anonymous]

We "rode out dips and bumps" with our stock investments and retirement funds but we were always very securely employed and nowhere near ready to draw them down.

You can't ride out a market dip or correction if you need to live off that money NOW.

Cap it at $100k but keep it secure.

[Anonymous]

I call it our working capital account/emergency fund and when HHI was $340k, had about $80k in a money market account. At some point it seems silly to keep so much in there, but spouse is in a volatile field, and layoffs have come multiple times in our 20 year marriage. So far, he has always landed on his feet, but one time it took 6 months and I was pretty freaked out

Marriage is about compromise - you both need to agree on how much to have on hand and where to keep it

[Anonymous]

Based on your age and numbers, I would aggressively invest and cut back some on the cash savings.

[Anonymous]

Anonymous wrote:I'd keep $100k in money market earning 4 percent and start investing any future dollars in index funds or stocks.

I was going to post something similar. OP can have their cake and eat it too. $100K is a nice healthy amount to sit safely in a HYSA accruing 4%. Now, start putting new monies into an index fund. That money can still be access worst case in event of true emergency/need.

[Anonymous]

I like having cash. It's buying flexibility and peace of mind, IMO. There's more value to money than squeezing out every bit of potential return - I think if having that cushion helps your husband feel comfortable re: potential job loss it's worth it.

We've got what feels like too much cash sitting too. Only we're hoping to move out west to a more expensive town in the next 3-7 years and with such a relatively short and squishy timeline I don't feel comfortable putting it in the market. Our mortgage rate is too good to pay off so my compromise is keeping the balance of our mortgage in cash and any interest it earns gets invested each month. And I also transfer an amount equal to our mortgage principal pay down to our brokerage so the cash cushion always matches the mortgage balance and some money is getting invested each month that way.

[Anonymous]

Anonymous wrote:My spouse and I are early 30s, make ~$315K a year combined. Between the two of us, I make ~$50K more a year and both jobs are relatively stable but his definitely more so (think nurse or police officer). No children but currently TTC. We own a home valued at $700K with $500K to pay off, and all housing costs (utilities, mortgage, property taxes, HOA) come to about $3300 a month. $500K in retirement, pretty even split between accounts, and $100K in liquid savings currently parked in a HYSA.

I think this is way too much in liquid savings and have started pulling some of my contributions to the savings account into a brokerage. We aren’t planning to buy a new home until our hypothetical children are school age, and the ‘big’ expenses we’re anticipating in the next couple of years are a new HVAC and hot water heater. My husband disagrees and says he prefers to keep the money liquid in case of home repairs or job loss.

What do you think?

Let’s do the math. $315K gross, so about $205K net assuming 35% lost to taxes and other deductions. So $100K liquid equal to about 6 months net income. Good number, invest money accumulated beyond the $100K and you have a win-win.

[Anonymous]

I have heard you need 6 months worth of living expenses , so agree that 100K is too much.

[Anonymous]

Anonymous wrote:We have the same disagreement. The issue is that he makes 3x my income, and our mortgage is based on our combined income. No way I could afford our mortgage and other expenses if something happens to his income (death, disability, divorce, job loss, etc). So, I keep 1 year of our cost of living in cash equivalents in my own separate account. He doesn't see it, so he doesn't harp about how it's not working for us, blah blah blah. It is working for me - it allows me to sleep at night. That's how I resolved this fight.

That is the purpose of insurance.

[Anonymous]

Anonymous wrote:I have heard you need 6 months worth of living expenses , so agree that 100K is too much.

"you heard" - there's a lot more to consider and this thread is doing a good job going over those reasons.