Donate to Remove ads

Got a credit card? use our Credit Card & Finance Calculators

Thanks to johnstevens77,Bhoddhisatva,scotia,Anonymous,Cornytiv34, for Donating to support the site

Fire Cash

Including Financial Independence and Retiring Early (FIRE)
airbus330
Lemon Slice
Posts: 558
Joined: December 1st, 2018, 3:55 pm
Has thanked: 364 times
Been thanked: 288 times

Re: Fire Cash

#405635

Postby airbus330 » April 20th, 2021, 4:47 pm

Joe45 wrote:Any amount of cash is a drag on returns. Early Retirement Now has carried out extensive research on this. Well worth a read.

However, I've also read research that shows that holding cash makes an investor feel better, so purely for psychological reasons, I hold 2 years' of non-discretionary spend in Premium Bonds. I consider the resulting drag on my portfolio to be money well spent.

ERN also concludes that holding cash as part of your bond allocation won't in any event make much of a dent in your returns.


The psychology of holding cash is very interesting. I was all in equity last year when markets fell swiftly and as a retiree, that made me very anxious. After a bit of fiddling I now hold 5yrs in cash/short bonds and I did a rough calc today of how much more I'd be worth today had I just kept my equity, it was quite a lot more, but I really didn't care as I knew if the market fell again tomorrow I would have at least 5 yrs of safety while everything settled down again.

WRT Motorhomes. Rent one for a short holiday before buying. Sort of try before u buy.

vrdiver
Lemon Quarter
Posts: 2574
Joined: November 5th, 2016, 2:22 am
Has thanked: 552 times
Been thanked: 1212 times

Re: Fire Cash

#406263

Postby vrdiver » April 22nd, 2021, 6:37 pm

1nvest wrote:If stocks drops 33% then cash buys 50% more shares than before.

Will the next 50% gain occur before the next 33% fall? All in stock and a 50% gain followed by a 33% fall has you back to 0% gain/loss. For 67/33 stock/cash the same cycle has you up 3.6%

All well and good, but can anyone actually call it as it happens, or is this just theoretical?

If, for example, I saw a 33% fall in stock and then thought "great, now's the time to convert that cash pile", and then sat back and watched the market recover, I'd be one-in-a-million, investor skill wise.

What if I "called it" at 25% drop, or 10%, or 5%?
What if I called the next peak and converted back to cash, only to see the peak get higher?

Hindsight and theory are fine, but practical advice seems harder to come by...

VRD

hiriskpaul
Lemon Quarter
Posts: 3852
Joined: November 4th, 2016, 1:04 pm
Has thanked: 682 times
Been thanked: 1489 times

Re: Fire Cash

#406270

Postby hiriskpaul » April 22nd, 2021, 6:53 pm

How much cash to hold depends on one's investment/drawdown strategy. Is the cash solely for emergencies or an integral part of the strategy? For example if you are following Mr Buffett's 90/10 strategy and rebalancing every year then that 10 could still be a lot of cash. At a 3% drawdown rate it would amount to 3.3 years of spending. Some strategies involve taking profits (dividends and gains) from risk investments when they perform well, but taking from cash deposits when they don't, or only when the cash buffer runs dry. For those kind of strategies a few years in a cash buffer is highly desirable, perhaps capping the cash buffer at 4-6 years spending and reinvesting additional gains, or increasing the drawdown amount.

About 20% of our portfolio is cash at present, but that is because I trade options and need the cash for variation margin. So cash is an essential part of the strategy.

hiriskpaul
Lemon Quarter
Posts: 3852
Joined: November 4th, 2016, 1:04 pm
Has thanked: 682 times
Been thanked: 1489 times

Re: Fire Cash

#406273

Postby hiriskpaul » April 22nd, 2021, 6:55 pm

vrdiver wrote:
1nvest wrote:If stocks drops 33% then cash buys 50% more shares than before.

Will the next 50% gain occur before the next 33% fall? All in stock and a 50% gain followed by a 33% fall has you back to 0% gain/loss. For 67/33 stock/cash the same cycle has you up 3.6%

All well and good, but can anyone actually call it as it happens, or is this just theoretical?

If, for example, I saw a 33% fall in stock and then thought "great, now's the time to convert that cash pile", and then sat back and watched the market recover, I'd be one-in-a-million, investor skill wise.

What if I "called it" at 25% drop, or 10%, or 5%?
What if I called the next peak and converted back to cash, only to see the peak get higher?

Hindsight and theory are fine, but practical advice seems harder to come by...

VRD

Then don't try to call it. Rebalance systematically to mitigate emotional problems.

gryffron
Lemon Quarter
Posts: 3606
Joined: November 4th, 2016, 10:00 am
Has thanked: 550 times
Been thanked: 1586 times

Re: Fire Cash

#406386

Postby gryffron » April 22nd, 2021, 11:19 pm

GrahamPlatt wrote:Motor home? Not everyone’s cup of tea, but it’s a thought (you may not have had).

Bad time. They’re as rare at the moment as toilet paper was 12 months ago. My neighbour was trying to find one but has given up. Apparently everyone is buying them for this years staycation. One lousy British summer and they’ll be cheap as chips as they all dump them and head back to the Costas.

:lol:

roger4
Lemon Pip
Posts: 81
Joined: November 5th, 2016, 3:01 am
Has thanked: 266 times
Been thanked: 44 times

Re: Fire Cash

#406598

Postby roger4 » April 24th, 2021, 6:17 am

Good luck OP.

Don't think about timing the market. Follow the Sage of Omaha's advice: "be greedy when others are fearful and fearful when others are greedy".

How much is he worth now??

Hariseldon58
Lemon Slice
Posts: 835
Joined: November 4th, 2016, 9:42 pm
Has thanked: 124 times
Been thanked: 513 times

Re: Fire Cash

#406663

Postby Hariseldon58 » April 24th, 2021, 3:25 pm

Well having walked the walk and went Fire in late 2007 with very little cash and a lot of equities I thought the drag on performance of cash was a poor idea. In March 2009 I was less sure ! It worked out but it’s not comfortable.

I strongly suspect that many going into Fire now, having seen a run of strong returns over the last 12 years and a rapid recovery from a crash underestimate the risk of what might happen...

My present strategy calls for a minimum six figure sum in cash or near cash, then add equities.

Using excess cash in April last year bought a new Motorhome, it provide scant rewards most of the time but every now and again it provides opportunities...

Equity returns can be very lumpy and sequence of returns risks are very real.

xxd09
Lemon Slice
Posts: 419
Joined: November 19th, 2016, 2:44 pm
Been thanked: 255 times

Re: Fire Cash

#406687

Postby xxd09 » April 24th, 2021, 7:05 pm

Such a personal decision depending on your ability to take risk and how much one has saved
I retired 2003-have a conservative portfolio 30/65/5 -equities/bonds/cash
5% cash equals 2 years living expenses
Stopped trading many years ago-SWR about 3-3.5%
Have seen more risk averse retirees on the Boglehead forum’s having up to 5 years living expenses in cash
xxd09

77ss
Lemon Quarter
Posts: 1271
Joined: November 4th, 2016, 10:42 am
Has thanked: 233 times
Been thanked: 414 times

Re: Fire Cash

#406712

Postby 77ss » April 24th, 2021, 9:11 pm

xxd09 wrote:Such a personal decision depending on your ability to take risk and how much one has saved
I retired 2003-have a conservative portfolio 30/65/5 -equities/bonds/cash
5% cash equals 2 years living expenses
Stopped trading many years ago-SWR about 3-3.5%
Have seen more risk averse retirees on the Boglehead forum’s having up to 5 years living expenses in cash
xxd09


It is indeed a very personal decision. Risk tolerance/dependants/other income......

I retired about the same time as you (2002 to be precise) and I was interested in your balance. I guess I am at the other extreme. 98% in equities and 2% in cash (roughly 1 years routine living expenses).

I can't make any recommendation for others - we each have to make our own decision on this point - just thought I would post a different balance.

1nvest
Lemon Quarter
Posts: 4323
Joined: May 31st, 2019, 7:55 pm
Has thanked: 680 times
Been thanked: 1316 times

Re: Fire Cash

#406799

Postby 1nvest » April 25th, 2021, 12:29 pm

77ss wrote:
xxd09 wrote:Such a personal decision depending on your ability to take risk and how much one has saved
I retired 2003-have a conservative portfolio 30/65/5 -equities/bonds/cash
5% cash equals 2 years living expenses
Stopped trading many years ago-SWR about 3-3.5%
Have seen more risk averse retirees on the Boglehead forum’s having up to 5 years living expenses in cash
xxd09

It is indeed a very personal decision. Risk tolerance/dependants/other income......

I retired about the same time as you (2002 to be precise) and I was interested in your balance. I guess I am at the other extreme. 98% in equities and 2% in cash (roughly 1 years routine living expenses).

I can't make any recommendation for others - we each have to make our own decision on this point - just thought I would post a different balance.

So you're both down in the 2% - 2.5% SWR value region, capital of 40 to 50 times spending. Very safe territory.

If retiring tomorrow however, perhaps using a 3% SWR, then sequence of returns risk is a major risk factor. Perhaps more so given recent high valuations/low inflation/interest rates. One way to reduce that risk might be to drop 30% into cash deposit accounts to cover the first 10 years of spending, leave the rest to accumulate (stocks/whatever). In the 'average' case that 10 year accumulation pot might near double over the ten years in real (after inflation) terms - such that whilst 0.3 is spent, the 0.7 rises to perhaps 1.33, overall a third up in real terms and where for the same inflation adjusted income production that's a 2.25% SWR figure (safe).

That might be considered as at the end of the ten years having lumped half into stocks at the start, averaged in half (other peoples money) over ten years. Sometimes lumping in works, sometimes its better to have averaged in, and that's close to having 50/50'd the choices.

If the next ten years were a historic bad/worst case, where perhaps even total returns with no withdrawals had dropped a third of the inflation adjusted value as has historically occurred at times, then at the end of the ten years 0.3 all spent, 0.7 having lost a third and overall value is down to around half of the inflation adjusted start date amount. Including some gold historically hedged such risk, was more inclined to see 0% type real outcome, such that you were left with 70% still intact. Whilst the cost of including such insurance was relatively mild. Maybe instead of seeing the 0.7 rise to being 1.33, instead seeing 0.7 rise to being 1.25 in the average case.

Something like 30 cash, 25 UK stock, 25 US stock, 20 gold initial. Just leave the UK/US/gold to accumulate (which is even easier if you hold funds that accumulate/reinvest dividends). That after 10 years transitions over to holding no cash, and more often (on average) will see the value having risen reasonably and to levels where you might even opt to sell the gold to buy stock shares with the proceeds assuming the the rate was comparable to a 2% type SWR. Rather than all in stock however after 10 years, many including Buffett like having 10% cash to hand. So if you start the first decade with 30% cash, end it with 10% cash = 20% average cash the first decade, but then 10% cash thereafter.

Once your at the 2% type SWR value, capital of 50 times yearly spending, then its pretty much irrelevant how that is invested, within reason. More a case of what risk (or not) you might take on for heirs. No heirs and even all in cash would more likely see you out. Heirs and all in stock and likely those heirs would be very grateful whilst your personal risk was low. Or whatever mix of assets that helps you best sleep at night.

Steveam
Lemon Slice
Posts: 974
Joined: March 18th, 2017, 10:22 pm
Has thanked: 1745 times
Been thanked: 534 times

Re: Fire Cash

#406812

Postby Steveam » April 25th, 2021, 1:33 pm

I retired 20 years ago aged 50. As said above, everyone’s circumstances are different and circumstances change over time.

When I was 50 I guessed my pot might need to last until I was 90 - 40 years. Now I’m 70 the pot doesn’t have to last so long.

1nvest mentions pot/annual expenditure ... this has always been one of my alerts on my spreadsheets. Last year my pot suffered (now recovered) and my expenditure collapsed. The ratio varied between 50 and 70 (excluding the house and my still deferred state pension). As 1nvest mentions I no longer have any real concerns about financial security although I’m aware that very high inflation could be a problem. The pot (some protected in a SIPP, some in ISAs, rest unprotected) is mainly direct equities, ITs and ETFs. Cash or equivalents (including gold) are 3 to 4 years expenditure.

I’ve learnt a lesson this last year: my expenditure can be cut dramatically (not that I wish to live with no holidays, operas, meals out, etc).

As circumstances can differ so greatly I’m not sure there is any real message here for the OP.

Best wishes,

Steve

hiriskpaul
Lemon Quarter
Posts: 3852
Joined: November 4th, 2016, 1:04 pm
Has thanked: 682 times
Been thanked: 1489 times

Re: Fire Cash

#406871

Postby hiriskpaul » April 25th, 2021, 6:21 pm

77ss wrote:
xxd09 wrote:Such a personal decision depending on your ability to take risk and how much one has saved
I retired 2003-have a conservative portfolio 30/65/5 -equities/bonds/cash
5% cash equals 2 years living expenses
Stopped trading many years ago-SWR about 3-3.5%
Have seen more risk averse retirees on the Boglehead forum’s having up to 5 years living expenses in cash
xxd09


It is indeed a very personal decision. Risk tolerance/dependants/other income......

I retired about the same time as you (2002 to be precise) and I was interested in your balance. I guess I am at the other extreme. 98% in equities and 2% in cash (roughly 1 years routine living expenses).

I can't make any recommendation for others - we each have to make our own decision on this point - just thought I would post a different balance.

Once you get the withdrawal rate down below 3%, then a range of asset allocations all end up being very safe, as described in this ERN blog post https://earlyretirementnow.com/2016/12/ ... t-1-intro/. (See the table near the bottom).

What is not shown is the trade off between risk and reward. The higher stock allocations usually result in higher final portfolio valuations, but the journey is likely to be much more volatile and possibly ulcer inducingly so with 100% equities. Should we be in for a rerun of the late 60s/early 70s , xxd09 is going to sleep much more easily with his portfolio than he would do if he had 77ss's portfolio. The lack of stress might even save him from an early grave.

On the other hand 77ss's portfolio will likely result in a much bigger legacy as extended periods of poor returns are unusual. It may even up up less stressful should stock markets keep climbing and the SWR keep dropping. With an SWR below 1.5%, 60% market drops don't matter too much even if they end up taking a decade or 2 to recover.

1nvest
Lemon Quarter
Posts: 4323
Joined: May 31st, 2019, 7:55 pm
Has thanked: 680 times
Been thanked: 1316 times

Re: Fire Cash

#406921

Postby 1nvest » April 25th, 2021, 11:56 pm

hiriskpaul wrote:What is not shown is the trade off between risk and reward. The higher stock allocations usually result in higher final portfolio valuations, but the journey is likely to be much more volatile and possibly ulcer inducingly so with 100% equities. Should we be in for a rerun of the late 60s/early 70s , xxd09 is going to sleep much more easily with his portfolio than he would do if he had 77ss's portfolio. The lack of stress might even save him from an early grave.

A investor who retired in the mid 1960's, January 1965 and applied a 4% SWR to a 50/50 UK/US stock asset allocation (all stock), would have had 43% of their inflation adjusted start date value at the end of 1974. For 3% SWR there was 48%, for 2% SWR there was 53%. By 1982 the 2% SWR had recovered former inflation adjusted start date value, for 3% it was 1984, for 4% it took to 1992.

Contrast that with a Wellesley, Golden Butterfly, 33/67 stock/bond type asset allocation and it was more a case of a 4% SWR having 55% of the inflation adjusted start date value at the end of 1974 ... and pretty much not recovering former levels since, just gradual decay to eventual failure (total loss) in 2007 (putting aside it was unlikely a retiree would have survived that long).

In short, there wasn't much less stress either way.

A equal UK/10 year gilt ladder/gold portfolio with a 4% SWR breezed through that era. Pretty much stayed at around the same inflation adjusted value, dipping to a low of 84% of former inflation adjusted start date value, peaking at 125%, around a broader 100% type average up to 1990 and then slow/progressive rise up to recent 150% levels.

Fundamentally the UK was bailed out in the mid 1970's by the IMF, high inflation etc. the Pound dropped from 2.80 US$ down to 1.70 type levels (down 40%), gold did well, aided by both that currency decline and from the US ending the US$/gold peg in the late 1960's/early 1970's.

I recall in Iceland after the 2008/9 financial crisis their Krona currency fell. Gold remained much the same price in Euros but rose a lot in Icelandic Krona. In that particular case it didn't matter whether a Icelander held gold or Euros, both equally hedged the Krona decline. But if invested in stocks, they also declined. A similar effect was evident in the late 1970's and early 1980's, whilst holding US$ would have seen gains, if those $ were invested in stocks then they also saw losses. In effect the UK's mid 1970's 'decline' saw the US enduring a albeit less harsh decline in the early 1980's and where stock declines largely voided foreign currency gains/benefits.

IMO a three way stock/bond/gold is potentially the better sleep-well portfolio compared to a 33/67 stock/bond choice.

This is the same portfolio again, but from 2000 and with a 4% SWR applied. Gold has again hedged the portfolio well. But at other times whilst it serves its purpose, it can see other asset allocations such as all-stock roar ahead, such as started from 1980 when the Dow/Gold ratio was down at 1.0 type levels (gold was expensive).

Those who do not learn history are doomed to repeat it

It's important to define/consider what 'cash' actually is. Could be domestic currency/notes, foreign currency/notes, or funds deposited into 'low volatility' accounts - that could still be destroyed by inflation/taxation. It used to be notes backed by something tangible/finite i.e. gold, but nowadays money is just a number ... that many states can freely print/spend to the detriment of devaluation of all other notes in circulation.

Darka
Lemon Slice
Posts: 773
Joined: November 4th, 2016, 2:18 pm
Has thanked: 1819 times
Been thanked: 704 times

Re: Fire Cash

#406936

Postby Darka » April 26th, 2021, 6:39 am

Certain posters seem incapable of reading the original question and it's context.

This was never about portfolio allocation of cash, just a simple enough question about how many pots of cash you are using in retirement and for what purpose.

As this is clearly too difficult for some to understand, I'd rather the entire thread be deleted and have asked a mod to do so.

Dod101
The full Lemon
Posts: 16629
Joined: October 10th, 2017, 11:33 am
Has thanked: 4343 times
Been thanked: 7534 times

Re: Fire Cash

#406937

Postby Dod101 » April 26th, 2021, 7:07 am

I can understand your frustration Darka. For what it is worth I think you are a little light on your balances. More as asset allocation than anything else I have more than three years of spending which like Hariseldon is well into six figures as cash plus a float which varies from not a lot (like now after the thin first four months of the year) up to probably around 50/60% of my annual spend. Irrespective of the return on it (mine is in index linked NS & I certs) a significant amount in cash is necessary for me anyway for piece of mind. I may say in over 20 years I have never touched it for day to day living expenses.

Dod

Itsallaguess
Lemon Half
Posts: 9129
Joined: November 4th, 2016, 1:16 pm
Has thanked: 4140 times
Been thanked: 10023 times

Re: Fire Cash

#406943

Postby Itsallaguess » April 26th, 2021, 7:19 am

Darka wrote:
Certain posters seem incapable of reading the original question and it's context.

This was never about portfolio allocation of cash, just a simple enough question about how many pots of cash you are using in retirement and for what purpose.

As this is clearly too difficult for some to understand, I'd rather the entire thread be deleted and have asked a mod to do so.


Whilst I fully understand your frustration, I'd ask you to perhaps reconsider asking for the removal of the whole thread...

Rightly so, quite a lot of sway is placed on the wishes of posters who start new and interesting thread-discussions on this site, and if you think any posts or posters are continuing to disrupt a more focussed discussion that you're wanting to take place on one of your threads, then simply reporting any such posts or posters and asking for them to be removed would be a much better outcome, and importantly, that process would also help to build up a longer-term picture of the types of regular thread-disruptions that sometimes go on here...

Cheers,

Itsallaguess

Darka
Lemon Slice
Posts: 773
Joined: November 4th, 2016, 2:18 pm
Has thanked: 1819 times
Been thanked: 704 times

Re: Fire Cash

#406946

Postby Darka » April 26th, 2021, 7:32 am

Dod101 wrote:I can understand your frustration Darka. For what it is worth I think you are a little light on your balances. More as asset allocation than anything else I have more than three years of spending which like Hariseldon is well into six figures as cash plus a float which varies from not a lot (like now after the thin first four months of the year) up to probably around 50/60% of my annual spend. Irrespective of the return on it (mine is in index linked NS & I certs) a significant amount in cash is necessary for me anyway for piece of mind. I may say in over 20 years I have never touched it for day to day living expenses.

Dod


Thank's Dod,

I am leaning more towards 3 years cash as the pot for maintenance/repairs will push me closer to those 3 years.

regards,

Darka
Lemon Slice
Posts: 773
Joined: November 4th, 2016, 2:18 pm
Has thanked: 1819 times
Been thanked: 704 times

Re: Fire Cash

#406947

Postby Darka » April 26th, 2021, 7:33 am

Itsallaguess wrote:
Darka wrote:
Certain posters seem incapable of reading the original question and it's context.

This was never about portfolio allocation of cash, just a simple enough question about how many pots of cash you are using in retirement and for what purpose.

As this is clearly too difficult for some to understand, I'd rather the entire thread be deleted and have asked a mod to do so.


Whilst I fully understand your frustration, I'd ask you to perhaps reconsider asking for the removal of the whole thread...

Rightly so, quite a lot of sway is placed on the wishes of posters who start new and interesting thread-discussions on this site, and if you think any posts or posters are continuing to disrupt a more focussed discussion that you're wanting to take place on one of your threads, then simply reporting any such posts or posters and asking for them to be removed would be a much better outcome, and importantly, that process would also help to build up a longer-term picture of the types of regular thread-disruptions that sometimes go on here...

Cheers,

Itsallaguess



Good idea Itsallaguess, I might do that.

Itsallaguess
Lemon Half
Posts: 9129
Joined: November 4th, 2016, 1:16 pm
Has thanked: 4140 times
Been thanked: 10023 times

Re: Fire Cash

#407005

Postby Itsallaguess » April 26th, 2021, 10:22 am

Darka wrote:
When retired, I aim to have a safety margin and a cash reserve as many here do, however I'm trying to work out how much other cash to keep.
I don't want to build too much, to be frank I'd rather spend it or invest some for inflation protection rather than have it sit in the bank.

So, my cash plans are:

- 1 Year Income Float (starts full and is refilled during the year from dividends/pensions - Live from this)
- 1 Year Spending Reserve (starts full in Premium bonds or similar - do not touch)

I'd be interested to hear what plans you have for your cash in retirement and how many "pots" you intend to have.


I'm currently working, and so I'm still formulating these kinds of ideas in all honesty, but having thought about this for a number of years on and off, then I can say that my own plans aren't too dissimilar to your own, but with a few tweaks in a few areas -

1. Income Float - more or less the same as you - I expect to have a 'full-year general expenditure account' worth of cash available, from which to fund my normal expenses, and into which any future dividends or pension would get paid, to then top-up that funding for future year's spending...

2. Spending Reserve - similar to you with regards to the Premium Bonds aspect, but most probably incorporating a larger reserve (2 or 3 years) and also incorporating some element of sporadic/bulk expenditures as well (car / kitchen, etc...)

One other thing I do want to touch on is that I do fully expect to be overly-cautious on the above approach initially, with a hope that things might be able to be scaled back somewhat as longer-term confidence in the whole 'FIRE' project gains momentum - I'm quite content to plan for the worst, but hope for the best, and then tweak things going forward as circumstances allow...

If there's one single 'good thing' to come out of this whole COVID experience, it's that many of us are likely to have been forced to prove to ourselves just how much belt-tightening can go on, even for what feels like a considerable length of time now, and yet still perhaps provide for a relatively good level of basic subsistence.

I was always interested in the background experiments actively run by our very own Julian, from these boards, where he set himself a series of 'living-standard' tests, to practically experience some medium-term situations of living under a number of varied funding-situations -

My starting point was what I called the "affluent student" level which was essentially a late 1970s (my era) university student living off a full government living allowance (those were the days!). In my day that allowed me to go out to the pub a few nights a week, a takeaway or cheap restaurant once a week but definitely having to think hard about twice a week, buying a few records etc. (Simpler times!).

My next step up was the "first proper/professional job" level (I started out as a software developer) which allowed more takeaways/going-out each week, one not extravagant holiday each year, running a cheap car, and a bit of disposable income on top which I mostly spent on gadgets, hi-fi & other geeky stuff (and I haven't changed much in the 40 years since!).

From there I did a couple more steps which are more difficult to characterise, they were actually discreet x-hundred pounds extra per month increments. At that point I'd stopped trying to associate them with stages in my real life which is what the first two were (and hence those first two steps were somewhat nostalgic because of the real life associations).


https://www.lemonfool.co.uk/viewtopic.php?t=22652#p296234

I think that's a great way to go about things, but do appreciate that such a commitment to those experiments will not be for everyone, of course.

What I'd say about the past 16 months or so, though, is that many of us are likely to have run at least one of those experiments ourselves due to the enforced COVID situation, and we might at least be able to tell ourselves that such restricted situations are workable to some degree, and to some level of much-reduced funding, and use that information accordingly even if it's as a potential 'emergency back-stop', where we've at least experienced it rather than it being just a potential academic exercise...

Every cloud...

Cheers,

Itsallaguess

Darka
Lemon Slice
Posts: 773
Joined: November 4th, 2016, 2:18 pm
Has thanked: 1819 times
Been thanked: 704 times

Re: Fire Cash

#407040

Postby Darka » April 26th, 2021, 11:15 am

Itsallaguess wrote:2. Spending Reserve - similar to you with regards to the Premium Bonds aspect, but most probably incorporating a larger reserve (2 or 3 years) and also incorporating some element of sporadic/bulk expenditures as well (car / kitchen, etc...)

One other thing I do want to touch on is that I do fully expect to be overly-cautious on the above approach initially, with a hope that things might be able to be scaled back somewhat as longer-term confidence in the whole 'FIRE' project gains momentum - I'm quite content to plan for the worst, but hope for the best, and then tweak things going forward as circumstances allow...

Cheers,

Itsallaguess


Thanks Itsallaguess,

Exactly the kind of reply I was hoping for originally and very helpful.

I am tempted to up the cash a little so might get closer to 3 years in total, which would be:

1 year income float
1 year reserve (hopefully never touch in premium bonds)
1 year sporadic spending reserve, new kitchen/bathroom, etc. (some cash, some premium bonds)

regards,
Darka


Return to “Retirement Investing (inc FIRE)”

Who is online

Users browsing this forum: No registered users and 6 guests