Is this too much cash, or is it appropriate?

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP, don’t listen to all the morons. The stock market is wildly overvalued right now and anyone holding cash is going to be king within the next 1-2 years. We’ve been in a highly volatile sideways market since late 2020. Hold onto your cash, rake in a comfortable 5% in high yield savings and money market funds, wait until the S&P drops to 4000, and then go all in.

I’ve done this dozens of times since 1990 and I’m sitting on a $918M portfolio of mostly cash with a cost basis of $2M. When the S&P 500 hits 4000, I buy; and then when it jumps back to 5000, I’ll be $250M richer than the dumb ones that decided to buy high too early.

Lol, is this real??

PP is probably trying to pull a fast one by using accounting M's instead of Ks.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP, don’t listen to all the morons. The stock market is wildly overvalued right now and anyone holding cash is going to be king within the next 1-2 years. We’ve been in a highly volatile sideways market since late 2020. Hold onto your cash, rake in a comfortable 5% in high yield savings and money market funds, wait until the S&P drops to 4000, and then go all in.

I’ve done this dozens of times since 1990 and I’m sitting on a $918M portfolio of mostly cash with a cost basis of $2M. When the S&P 500 hits 4000, I buy; and then when it jumps back to 5000, I’ll be $250M richer than the dumb ones that decided to buy high too early.

Lol, is this real??

PP is probably trying to pull a fast one by using accounting M's instead of Ks.

Nope. I know how to use Ks too. As in, I just earned $125K in interest income in a single day while waiting for the stock market to undergo a correction. Basic stuff, people.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP, don’t listen to all the morons. The stock market is wildly overvalued right now and anyone holding cash is going to be king within the next 1-2 years. We’ve been in a highly volatile sideways market since late 2020. Hold onto your cash, rake in a comfortable 5% in high yield savings and money market funds, wait until the S&P drops to 4000, and then go all in.

I’ve done this dozens of times since 1990 and I’m sitting on a $918M portfolio of mostly cash with a cost basis of $2M. When the S&P 500 hits 4000, I buy; and then when it jumps back to 5000, I’ll be $250M richer than the dumb ones that decided to buy high too early.

Lol, is this real??

PP is probably trying to pull a fast one by using accounting M's instead of Ks.

Nope. I know how to use Ks too. As in, I just earned $125K in interest income in a single day while waiting for the stock market to undergo a correction. Basic stuff, people.

Yeah, we all believe you're a billionaire with a billion in cash.

[Anonymous]

Anonymous wrote:OP, don’t listen to all the morons. The stock market is wildly overvalued right now and anyone holding cash is going to be king within the next 1-2 years. We’ve been in a highly volatile sideways market since late 2020. Hold onto your cash, rake in a comfortable 5% in high yield savings and money market funds, wait until the S&P drops to 4000, and then go all in.

I’ve done this dozens of times since 1990 and I’m sitting on a $918M portfolio of mostly cash with a cost basis of $2M. When the S&P 500 hits 4000, I buy; and then when it jumps back to 5000, I’ll be $250M richer than the dumb ones that decided to buy high too early.

This guy is off his meds.

[Anonymous]

Anonymous wrote:Curious if you would be eligible for social security when you hit full retirement age. If not, you should definitely consider a Roth IRA to save more deliberately for retirement. It is easier to access Roth funds (especially the principal) in a pinch.

Why would she not be?

[Anonymous]

We have a lot of cash in a high yield savings account. I feel fine leaving it there.

[Anonymous]

Anonymous wrote:If conservative lets you sleep at night, then good

As long as she's OK with never retiring, sure.

[Anonymous]

Anonymous wrote:

Anonymous wrote:You own a condo, which probably won’t appreciate that much and has HOA fees, and have lots of cash, which will only depreciate. Not good. You need something that has a good chance of appreciating a lot and outpacing inflation.

You are correct about this, and it is something that I do worry about. The condo has appreciated at something like 2% per year since I bought it – it hasn’t even kept up with inflation.

You are worried about the appreciation of the non-liquid portion of your net worth, that you aren't thinking of selling any time soon, but are content to keep the rest of your net worth in cash? That's completely incoherent.

I'll take your word for the fact that you aren't financially illiterate, although your circumstances suggest otherwise (paid off house, no retirement). But if that's true, your anxiety is forcing you to make very poor choices, and you should seek treatment for it before it does any more damage.

[Anonymous]

You’re losing money, OP. Invest it instead.

[Anonymous]

At 42 you need to be saving for retirement. So even $2k in a Roth acct is a start. Your contributions to the Roth can be taken out at any time, it is the Roth earnings that are subject to the 5 year rule. Back Door Roths, you will have to research that.

You have way too much money in CDs, fixed income. You need to slowly diversify into the stock market, and that doesn't mean bonds, just more fixed income. You are self employed, so you need to investigate other types of accts for qualified money that will benefit you. SEP-IRA or your own 401-K.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Curious if you would be eligible for social security when you hit full retirement age. If not, you should definitely consider a Roth IRA to save more deliberately for retirement. It is easier to access Roth funds (especially the principal) in a pinch.

Yes, I am eligible for Social Security – my business pays me a salary from which Social Security and Medicare taxes are taken out.

I did look into a Roth IRA, but the problem — as I understand it — is that while I am still eligible to contribute based on my income, I can only contribute a tiny amount because the contribution limits decrease once your income is above something like $120,000. At my current income of $140,000, I believe I was only eligible to contribute something like $2,000 for the year, so not a meaningful amount.

The alternative is the backdoor Roth IRA, but if I understand correctly, there is still a five-year period where you cannot access even the contributions without paying a penalty.

I have looked into all of this stuff. I’m not financially illiterate, but it’s just that the thought of not having enough cash — or previously, the thought of having a mortgage — frankly terrifies me.

If you have your own business, you can open a Roth 401k.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You own a condo, which probably won’t appreciate that much and has HOA fees, and have lots of cash, which will only depreciate. Not good. You need something that has a good chance of appreciating a lot and outpacing inflation.

You are correct about this, and it is something that I do worry about. The condo has appreciated at something like 2% per year since I bought it – it hasn’t even kept up with inflation.

You are worried about the appreciation of the non-liquid portion of your net worth, that you aren't thinking of selling any time soon, but are content to keep the rest of your net worth in cash? That's completely incoherent.

I'll take your word for the fact that you aren't financially illiterate, although your circumstances suggest otherwise (paid off house, no retirement). But if that's true, your anxiety is forcing you to make very poor choices, and you should seek treatment for it before it does any more damage.

Oh shut up, she has a paid off house and hundreds of thousands in cash. Stop pretending she’s a complete idiot bc she’s better off than most in her age group.

[Anonymous]

Do you have any retirement savings?

[Anonymous]

Anonymous wrote:

Anonymous wrote:If conservative lets you sleep at night, then good

As long as she's OK with never retiring, sure.

“Never retiring” is pretty extreme. As I mentioned earlier, I spend about $35,000 per year. Using the 4% rule, that means I need less than $1 million to retire.

As I also mentioned, I’m now earning $140,000 per year. How difficult can it really be to save/invest $1 million if I make $140,000 and spend $35,000 a year, even starting now at age 42?

I mentioned that the $140,000 income is shaky, but that is actually a big part of why I feel that I need so much cash. Businesses are basically cash cows that keep spitting out money, but they take some time and money to build. I feel that keeping $150,000 to build a new business if needed will pay out more in the long run than the 7-8% I’d get from investments.

While I do feel that I have a much higher need for safety than I see in others around me, I think part of the discrepancy is that people who have only worked as employees don’t understand the cost and process involved in starting a business.

[Anonymous]

OP, most people don't include their car in their net worth. It's a depreciating asset and it's highly unlikely you could sell it for what you paid for. Real estate on the other hand often increases in value, but it's illiquid value - you need somewhere to live after all, and if you ever decide to sell there are associated costs (realtor fees, settlement fees, potentially capital gains).

So really, what you have is low expenses (thanks to a paid off home and car) and a liquid net worth of $270K.

I'm self-employed too and I don't care what the experts say, I like having a lot of cash on hand. However, I also invest in index funds (I'm 60% stocks, 40% fixed income which includes bond funds, treasuries, CDs and cash) so I don't worry too much about inflation or feel like I'm missing out on gains. Being all cash is risky too, it's just a different kind of risk.

I have a friend who used to be terrified of the stock market but over the past few years, slowly got to 30% stocks (which her financial advisor told her is the minimum needed to keep up with inflation). She's been very happy with her decision, especially lately. Maybe you could consider starting off at a similar level, and investing 1/3 of what you have.