How much cash should I have in my bank accounts before investing the rest? For context, I am a second-year analyst and I'm having trouble deciding how much of my savings should be liquid vs. investing. I have no student loans or credit card debt as well as no help from my parents. What would you say is a good #? Appreciate any insights!
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Always be invested. I buy VTI QQQ every week. No more than $10k for me. If a serious emergency ever happens these are extremely liquid indexes for a reason.
This is what I do. I keep 5-15k in my account and honestly it really only ever gets over 10k if I forget a pay cycle or something. I put it all into a brokerage. About 25% single name stocks, 60% broad ETFs (some levered) and the rest into speculative shit.
The caveat here is that I'm in a fortunate situation where I know if I had some type of life altering / shattering situations come up I'd always be supported by my parents.
Anything short of that (laid off, in between jobs, had a big expense come up, etc.) would be well supported by the ~10k cash I have. If I needed to, I'd consider almost all of my brokerage "almost liquid"
Bump
9 months of base salary in cash. Everything else in investments - dollar cost avg with opportunistic buying.
Wtf 9 months base? Way too high invest some more
It’s a tiny sum once you’re 3-4 years in IB/PE/HF
Zero, lever tf up
I would think however much you feel you need in your savings account to feel comfortable investing/spending the rest. Everyone is different and has different situations/needs/preferences. Investing is good but think it’s important to note that money invested in the market does have at least a non-zero risk of going to zero or being meaningfully impaired at least temporarily / for a while. Either way, best wishes and good luck :)
If the market went to "zero" you'd have to worry about guns and ammo not fiat currency.
Right now like $150 so I can buy a bag of weed in a few days. Otherwise 100% invested in stocks (95% with intl/EM skew) and crypto (5%). Cash major drag on LT PA performance but obv everyone has different circumstances. You could also argue that with inflation concerns, it is a major risk not investing as much as possible by instead having an "emergency fund" with negative real yield. Interested in thebrofessor 's thoughts here.
I don't count this towards by net worth but my company uses a "cash balance plan" that is pretty well funded and I'd have access to if I were to ever get canned.
Also if you have a decent credit card why wouldn't you use that for all expenses.
I respect your opinion, I disagree 100%. my opinion is rooted in my favoring of survival first, then profit, not absolute return. if you don't make it through the next cycle, you can't profit from the upswing, so please remember my comments are skewed accordingly. a hypothetical loss of inflation for the certainty that my money's guaranteed if I need it in a crisis is worth it to me. what happens if this emergency occurred on march 30th 2020 and my PA is down 35%? I'm fucked twice, because I have to sell at the bottom and I'm in an emergency. asymmetrical payoff in my opinion. plus, nobody ever went to the poor house because their PA was doing 15% instead of 20% because they were cash heavy, but plenty of people have been fucked by relying too much on credit/leverage and maintaining low cash balances.
my mantra is I want to be able to survive a nightmare scenario without tapping any of my long term investments. say somebody sullies my name and I get fired, I need enough cash in the bank for me to lawyer up, make a few mortgage payments, pay every insurance deductible I have, get bailed out of jail, and put gas in the car, and that's minimum. I live pretty below my means so this doesn't mean 6mos of income, plus my wife works so I won't have to 100% cover everything. if we have children I'll up my cash buffer since I'd imagine she'll stay at home for a time
additionally, I'll let cash accumulate for opportunistic purchases, like another car, a nice vacation (I put everything on credit cards for points/security but always have it in cash as well), potential down payment on next house, and so on.
Also different if you're saving for a down payment in the near/medium term IMO .. I'm saving that in cash since I have an opportunistic mindset where I don't want to risk it in the market and if market takes a hit there will be deals to be had - cash is king
Yeah I've moved away from the idea of buying primary residence in my HCOL city and ramped up risk. GL with your process.
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