Cash reserves in brokerage account
Cash reserves in brokerage account
For those that have brokerage accounts and actively contribute, how much do you keep in your cash reserves?
I have a couple of positions in my Fidelity account and with Fidelity I cannot do automatic investments, only transfers, which go into my cash reserves account.
Currently I invest $250 each month into VOO through my cash reserves which comes from an automatic transfer through my personal checking account. I have a solid flow in my checking account and trying to maximize where it sits while waiting deployment.
Would any benefit exist of putting more into my cash reserves even though I will not invest that exact amount each month versus sitting in my checking?
Is there a general rule of thumb on this?
I have a couple of positions in my Fidelity account and with Fidelity I cannot do automatic investments, only transfers, which go into my cash reserves account.
Currently I invest $250 each month into VOO through my cash reserves which comes from an automatic transfer through my personal checking account. I have a solid flow in my checking account and trying to maximize where it sits while waiting deployment.
Would any benefit exist of putting more into my cash reserves even though I will not invest that exact amount each month versus sitting in my checking?
Is there a general rule of thumb on this?
Re: Cash reserves in brokerage account
have enough cash reserves in cash equivalents - savings, checking, CD's, MM, short term bonds, etc. to serve as your emergency fund and/or your allocation for conservative assets. That's a personal decision. Having 6 months of spending needs in cash equivalent is a reasonable number.
Re: Cash reserves in brokerage account
I think it depends on what kind of account the brokerage account is. For me, if it is a Roth brokerage account, it is waiting for a good "opportunity", that I would expect to grow a lot (tax-free). There isn't much in my tax-deferred brokerage account as that is my QCD source (and I might as well maximize how much charity gets). If it is in taxable, I think of it as my "emergency fund" since I can move that to checking in a day.
A dollar in Roth is worth more than a dollar in a taxable account. A dollar in taxable is worth more than a dollar in a tax-deferred account.
Re: Cash reserves in brokerage account
My taxable brokerage settlement fund is my emergency fund. I keep six months expenses there. Any new money, including dividends, gets moved to the appropriate stock index fund.
What are the interest rates in your cash reserves versus your checking account? It probably doesn't make much difference. Would you be less likely to spend it if it's not in checking?Would any benefit exist of putting more into my cash reserves even though I will not invest that exact amount each month versus sitting in my checking?
Re: Cash reserves in brokerage account
As close to $0.00 as I can possibly get. At the moment ALL my taxable brokerage accounts have $0.00 in them. My Roth IRA has $1.10 in it.
Re: Cash reserves in brokerage account
I've begun to park nearly all brokerage cash in a bond fund. Don't want to sell equity shares so avoid buying ETF shares, etc. Bond fund price does fluctuate a bit but not nearly as much as share prices, even shares of SPY, and the like, can move up/down.
When eventually i need that cash i sell some bond shares. Cash is a known zero, the bond fund is 50/50, or better.
When eventually i need that cash i sell some bond shares. Cash is a known zero, the bond fund is 50/50, or better.
Re: Cash reserves in brokerage account
This has been my practice. I won't make the effort to clear $50 from cash reserves to an investment...but I won't let $500 sit there for very long.
- abuss368
- Posts: 27850
- Joined: Mon Aug 03, 2009 2:33 pm
- Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
- Contact:
Re: Cash reserves in brokerage account
In our Vanguard brokerage, the cash balance is minimal and essentially a rounding error. We are fully invested.
That said, I do not keep a cash allocation. We add funds and buy what is under weight to the target portfolio allocations.
Tony
John C. Bogle: “Simplicity is the master key to financial success."
Re: Cash reserves in brokerage account
As little as possible. I think you'll find that, speaking generally, Bogleheads believe in only the barest of emergency funds. That said, it's never wise to invest money intended for large purchases like a home or college tuition; that money is best kept in a cash-like fund.
50% VTSAX | 25% VTIAX | 25% VBTLX (retirement), 25% VTEAX (taxable)
Re: Cash reserves in brokerage account
This. I transfer cash in and buy taxable shares when desired, leaving a specific target amount in cash. I prefer not to leave my emergency fund in checking (Fido CMA) as there are more means of access such as Debit card and checks. And cross account transfers are instant if needed.
Re: Cash reserves in brokerage account
I do not keep cash in the brokerage accounts.
I do have an emergency fund in a savings account which I am gradually reducing upon meeting the FI goals (e.g. losing a job no longer needs to be treated as an emergency).
I do have an emergency fund in a savings account which I am gradually reducing upon meeting the FI goals (e.g. losing a job no longer needs to be treated as an emergency).
Re: Cash reserves in brokerage account
$0 or as close to it for me. My emergency fund is in high yield savings accounts, and if I need bail money there's always the I Bonds.