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Thanks low, like I said we are conservative with our money and prefer to have a large security blanket financially. My wife and I work in entirely different fields, and I account for roughly 80% of our income. My wife works part time so she can be home with our young daughter. If I were to lose my job, her income would not be enough to support us alone.
Thanks low, like I said we are conservative with our money and prefer to have a large security blanket financially. My wife and I work in entirely different fields, and I account for roughly 80% of our income. My wife works part time so she can be home with our young daughter. If I were to lose my job, her income would not be enough to support us alone.
I think keeping $100K entirely liquid is a bit of a waste. If it were me and I was spending $10K/month on bills, I would only keep around $60K actually liquid. The rest would be in some low risk ETF's or mutual funds. Items that could potentially earn me money, but if I REALLY needed it I could always pull it back out.
FWIW, I find it odd that you have $10K/month for expenses. Is your COL REALLY that high or are you including other unnecessary items as a part of your "living expenses". Things like Gym Memberships, Contributions to your daughters college fund, landscaping, etc should all not be considered as apart of your living expenses IMO. Those items can quickly be put on hold in the event of an "emergency".
I think keeping $100K entirely liquid is a bit of a waste. If it were me and I was spending $10K/month on bills, I would only keep around $60K actually liquid. The rest would be in some low risk ETF's or mutual funds. Items that could potentially earn me money, but if I REALLY needed it I could always pull it back out.
FWIW, I find it odd that you have $10K/month for expenses. Is your COL REALLY that high or are you including other unnecessary items as a part of your "living expenses". Things like Gym Memberships, Contributions to your daughters college fund, landscaping, etc should all not be considered as apart of your living expenses IMO. Those items can quickly be put on hold in the event of an "emergency".
Thanks ChiGuy. Yes, I am including in living expenses costs that are very much optional, like our monthly contributions to my daughter's college fund, cable and internet, babysitting, etc. If I lost my job I'd certainly be able to cut much of that out, but we still live in a very high cost of living area.
I'd keep $25K as cash, and put the rest into either a CD ladder or a short-term bond fund. Only the first 3 months or so of expenses needs to be IMMEDIATELY liquid; the rest can go into other vehicles that give a better yield while still offering reasonable protection of the principle.
I would say KEEP your 1 year emergency fund, the idea that you have that much of a cushion is far better than just 3 months or 6 months {many find out the hard way}, so I commend you on keeping it. Smart couple!!
I would also say keep it SAFE and liquid...anything in the stock market/bond market may NOT be safe., the lower interest rate is the price you pay for both instant liquidity and security!
Shop around for banks/ CUs in your area that may pay higher on CDs, especially if laddered, but keep at least 3 months in total liquid, then keep CDs so you can cash in at the 3 month mark at any time.. A local bank in my area pays .40% up to 1.30% on laddered CDs of $5k each. they offer 1.5% on a checking account with high yield checking balance of $15k!!!
SHop around for Money market rates too, that same bank pays .12% on $100k or more...but the money market account may not pay more than a regular savings acct,,,,that same bank only pays .10% on $25K or more!
Well, best of luck in finding a better rate, but KEEP it LIQUID!!
We have a similar size of cash pool but potentially for a house downpayment in two-three years. We moved our cash around between Ally and Optimizer just for a miserable difference of .2%.
However, I started arbitraging trades by investing in to-be-acquired co in April. Two trades so far and gained 3%. It is boring but I am surprised that the yield is that high.
Because my job is somehow related to the healthcare industry, this is the sector I invest in. I bought and sold CTRX for 2% and is now holding OCR (1.5%+). I find other trades with 4%+ diff but am not sure if the deal will run into antitrust issues. DOJ &FTC are pretty active now.
Last edited by fzx; 07-15-2015 at 08:13 AM..
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