Too much cash

[LivingAlmostLarge]

So I've had up to $300k in cash. We ended up investing about $200k of it in 2020 because we gave up on the idea of buying a investment property. I was trying to buy a multi family. Then I decided to keep ahead of inflation we kept on investing. Then the ibond rate seemed crazy this year and I bought another $40k so we have now $10k EF, $16k Roth IRA, $8k sink, $6k property taxes, and then my i bonds are at $100k. I just bought DH $20k in i bonds end of last year and this month and same for myself.

I haven't been this low on cash since we were broke grad students. But this time it feels okay because we seem to have so much sink/flex funds.

[GoodLiving]

Like Steve, we're looking at possible retirement in 3-5 years so we're starting to build up our savings to have 2-3 years liquid expenses.

[ua_guy]

We've held aside a little more than $150k and feel it is too much. There's a story there and we are deciding whether or not we will pay off our house. Beyond emergencies, that's why we kept stuffing money in cash.

[Fishindude77]

Yeah, but how much were you up last year? The market is going to fluctuate. People tend to focus so much on the negative waves that come but if you look at the past 10 years, im guessing that $50k is extremely minimal.

Completely understand all of that, and have what we feel is plenty of $$ at play in the market.
Also understand that a bunch of it, or all could be lost if some crazy black swan event came along. Some risk comes along with those potential rewards.

[disneysteve]

I've actually been actively building our cash war chest in preparation for retirement. I want to have 2-3 years of cash on hand which means at least 200K.

We also have some large expenses looming - new roof, replacing DW's' car, etc., so I want to be prepared to pay cash for those things.

[Jluke]

Target is
40k emergency
10k sinking
10k savings cushion

When those targets are exceeded I evaluate where we are and move money to invest or hold depending on upcoming expenses.

just be sure that recency bias with the market isn’t persuading you to invest more. You can probably re-save the amount you are moving to investments fairly quickly with new money so may not matter.

[rennigade]

We maintain a fairly large chunk (over $500k) of our savings in CD's, savings and checking accounts. It's not making significant interest, but it's safe and not losing any either.
Whereas our mutual funds balance dropped approx. $50k just this week, when the market dropped. Have seen events in the past where our market invested money dropped by 25% or more pretty much overnight.
Having the majority of our net worth tied up in the stock market at all times would worry me.

Yeah, but how much were you up last year? The market is going to fluctuate. People tend to focus so much on the negative waves that come but if you look at the past 10 years, im guessing that $50k is extremely minimal.

[Fishindude77]

We maintain a fairly large chunk (over $500k) of our savings in CD's, savings and checking accounts. It's not making significant interest, but it's safe and not losing any either.
Whereas our mutual funds balance dropped approx. $50k just this week, when the market dropped. Have seen events in the past where our market invested money dropped by 25% or more pretty much overnight.
Having the majority of our net worth tied up in the stock market at all times would worry me.

[rennigade]

Right now we have $125k in cash. That represents 7% of what we have. We have a kitchen remodel coming up this year which will probably cost around $50k so we wont be quite as cash heavy then.

[bjl584]

I'm sitting at around $15K in liquid cash.
That represents around 5 or 6 months worth of expenses. Give or take.

It earns hardly anything, but that doesn't bother me, since it really isn't supposed to.

If I had more than what I do, then I guess I'd be thinking like you are.

[kork13]

For the last 1.5 yrs, I've been slowly building up a sizeable chunk of cash. Excluding our I-bond EF, the float in checking & our rental home account, currently sitting with $76k in savings, earning a measley 0.5%. We want to keep some cash on hand as sinking funds, but I believe our sinks have become too deep.

So over the next 6 weeks, I'm going to be investing $5k/wk from those savings into our taxable investments ($30k total). I'm also cutting in half the money we're sending into savings to slow its growth, diverting that money direct to the taxable investments.

I'd like to say this is an intentional move based on some grand assessment of stock market opportunities or some jazz like that. But no, it's simply because inflation is running so wildly high right now that it's silly to hold onto excess cash when it's earning peanuts.

My question: How much do you all keep in liquid cash, sinking funds, or otherwise? Perhaps in relation to your monthly income or expenses? Or as a percentage of investable assets? How do you bound what's reasonable to keep in cash?

Once this cash is back in the market, our remaining cash will amount to 6mo expenses in I-Bond EF, 1yr expenses in general savings/sinking funds, and 1yr rental expenses in rental account

That feels a little more reasonable... Just curious if you have any rhyme or reason to managing your liquid cash.