Cash reserves in brokerage account

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills.
Post Reply
Topic Author
AK59
Posts: 140
Joined: Fri Aug 16, 2019 7:52 pm

Cash reserves in brokerage account

Post by AK59 »

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?
Dennisl
Posts: 343
Joined: Sun Jun 09, 2019 1:46 pm

Re: Cash reserves in brokerage account

Post by Dennisl »

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.
User avatar
celia
Posts: 16774
Joined: Sun Mar 09, 2008 6:32 am
Location: SoCal

Re: Cash reserves in brokerage account

Post by celia »

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.
User avatar
Duckie
Posts: 9777
Joined: Thu Mar 08, 2007 1:55 pm

Re: Cash reserves in brokerage account

Post by Duckie »

AK59 wrote: Tue May 18, 2021 3:08 pm For those that have brokerage accounts and actively contribute, how much do you keep in your cash reserves?
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.
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?
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?
livesoft
Posts: 86080
Joined: Thu Mar 01, 2007 7:00 pm

Re: Cash reserves in brokerage account

Post by livesoft »

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.
Wiki This signature message sponsored by sscritic: Learn to fish.
rosalee
Posts: 130
Joined: Sat Oct 17, 2020 7:17 pm

Re: Cash reserves in brokerage account

Post by rosalee »

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.
Fired2020
Posts: 39
Joined: Sat Jan 23, 2021 3:12 pm

Re: Cash reserves in brokerage account

Post by Fired2020 »

livesoft wrote: Tue May 18, 2021 4:29 pm 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.
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.
User avatar
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

Post by abuss368 »

AK59 wrote: Tue May 18, 2021 3:08 pm For those that have brokerage accounts and actively contribute, how much do you keep in your cash reserves?
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."
mikejuss
Posts: 2833
Joined: Tue Jun 23, 2020 1:36 pm

Re: Cash reserves in brokerage account

Post by mikejuss »

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)
schwank
Posts: 102
Joined: Sat Jul 18, 2015 1:14 pm

Re: Cash reserves in brokerage account

Post by schwank »

Duckie wrote: Tue May 18, 2021 4:26 pm 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.
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.
TheHiker
Posts: 491
Joined: Fri Feb 05, 2021 8:34 pm

Re: Cash reserves in brokerage account

Post by TheHiker »

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).
calwatch
Posts: 1447
Joined: Wed Oct 02, 2013 1:48 am

Re: Cash reserves in brokerage account

Post by calwatch »

$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.
Post Reply