The Stock Market, Investments, and Investing Thread
(07-28-2019, 12:43 AM)RoadTo100 Wrote: Great thread --- personally I am in a phase of my career where I'm doing less consulting work (= earning less) and spending more on my fledgling online businesses.

Therefore, my net worth has been trending slightly negatively for the last year or so.

While I still maximally invest in my tax advantaged accounts each year (and have that money in various index funds + near-monopoly tech stocks), the rest of my money is sitting in a ~2.2% interest bearing savings account.

All told, I've probably got 2-3 years of living expenses in the savings account rather than in the market.

While this seems like a lot, is it? My worst-case scenario would be needing to sell investments during a downturn to pay for my life/business expenses. Is 2-3 years cash in the bank overdoing it? If so, how much would you keep "in cash" versus invested?

Under normal circumstances I try to project my cashflow 6-18 months in advance, and how far I go in advance depends, in part on the certainty of my income stream and if I  have some BIG ticket item expenses that might extend out for a decent amount of time.  

Accordingly, it  sounds to me that you are going through a period of time that justifies having a longer timeframe for certainty of cashflow, and of course, no one wants to be in a position of having to cash out of any asset that is at a time that is not of his choosing.

You can probably only narrow down the amount of cash that you have, if you rethink the liquidity of your other assets too, and it is pretty rare that you will ever have enough confidence to know exactly which way an asset might go, but sometimes going through a reallocation will also force you to consider an update about how you feel about each of your assets and cause you to better understand if your 2-3 years of projecting your cashflow ahead is reasonable for your circumstances.

Another thing that I do is that when I am projecting cashflow, I will project the lowest reasonable income and the highest reasonable expenses, so frequently along the way, I will end up having more money available than I had anticipated in my projection.   This will also cause me to have higher comfort in terms of investing higher portions of my cashflow with a kind of knowledge that I have already framed my matter in highly conservative ways and for worser case scenarios, so I will frequently have a decent amount of cushion here and there along the way that I am going to be able to draw from.

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RE: The Stock Market, Investments, and Investing Thread - by JayJuanGee - 07-28-2019, 06:45 AM

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