What Percentage of Your Portfolio is Cash?

[Bluerobin]

A comment in Rovo's market journal got me to wondering. How much of your portfolio is in cash? Right now, I probably have about 15 %.
What do you see as a good amount, etc?

[Deleted]

I have about 8% of my portfolio in cash.

[Deleted]

We're at about 20% which is way too much cash. In general I'm thinking 10% would be good between EFs and "opportunity" money.

But of course it all depends on what is your NW and your immediate plans. For some folks their EF might be their entire positive NW and for some us more "mature" types even 5% is a boat load of cash.

[Deleted]

I agree. I think the dollar amount, not necessarily the percentage is more important, esp throughout your working life.

As you get towards retirement, have 5-10% of your money in cash is more important, though.

[rovo]

I'm at 27% cash and cash equivalents. I consider the options I hold to be cash equivalents at the current market value of the option. In general the value of these options is trivial so it doesn't affect the actual cash position by more than a percent or two.

Everyone's circumstances are different. I need to hold a bit of cash to cover a six figure tax bill due in April. I also want some cash available in case I decide to make a play on gold. I also am trying to make a buy on ISRG and this will reduce the cash position also. A couple of hundred $K for sort term trading and then I'm right where I want to be.

[Bluerobin]

Rovo aren't final 2010 quarterlies due tomorrow?

[rovo]

Rovo aren't final 2010 quarterlies due tomorrow?

I think so. They have already been mailed by DW. I don't see how this pertains to anything.

[Deleted]

I think Blue's comment is that why would you have a six figure tax bill due in April if you are paying your quarterlies?

[yclept]

Right now I'm almost exactly 30% cash which is higher than I'd like it to be in a rising market, but I recently took profits in several positions. About half of that 30% hasn't settled yet (it's in a Roth, so has to settle before being used unless I want to risk a "free-ride", which I did do a few times in the last several weeks). My ideal would be to have zero cash -- in rising markets I want to be all-in long, in falling markets, all-in short, but I've never attained that ideal, especially in the falling market aspect.
Some people above are designating what I would term non-investing moneys in their cash percentage. I don't count that. Money outside of the brokerage accounts that is needed for living expenses, etc. is not counted as "portfolio cash" in my accounting above. I always keep about $30, $40K highly liquid to cover bumps in the road (like taxes, insurance, anything that breaks or needs to be replaced, miscellaneous purchases ). I like to keep it around the lower mark; when it crawls up towards the upper one I send some of it off the the taxable brokerage account (in which case it would become "cash" until I committed it to a position). About three years ago I had to make substantial withdrawals from the taxable brokerage account to cover final payments to contractors for the rebuilt house, but since then I've taken nothing from the brokerage accounts. I've never withdrawn from the IRA and intend to keep it that way by living within my means. Every now and then a nice sloop crosses my mind, which would require a dip into the IRA, but most of my sailing friends have gotten too fat and old to be decent crew -- I've gotten just as old, but not as fat. But then having had a sloop when young, I remember all the time and money it cost and am reminded of the saying "the happiest day in a man's life is the day he buys his boat; the second happiest is the day he sells it!".

[yclept]

Wow, I just got the bug again. Here's a great old lady (a ketch, no less) for an amazing price assuming the condition is as described and the suit of sails serviceable sfbay.craigslist.org/sfc/boa/2164225146.html

[rovo]

I think Blue's comment is that why would you have a six figure tax bill due in April if you are paying your quarterlies?

Because my quarterly payments are designed to pay more in taxes than the total for last year. This does not mean they will come close to covering this year's tax liability.

[yclept]

Yep, tax liability last year plus $1 is all the sum of quarterlies has to cover. Next year they'll have to be a lot higher or you'll have to make an effort to make a lot less profit! Let me see if I don't have some old Enron certificates around here somewhere that you might want to buy (joke, fortunately I never owned Enron -- that's one scam I managed to avoid!).

[rovo]

Yclept, I followed your link and looked at the Ketch. It is cool and the price does look good for 44'. A 12' beam should give quite a bit of room to the inside. Condition of the engine is always a potential expense. Those marine engines always seem to need something done to them but at least it is a diesel. Go ahead and buy it and I'll come out for a few weeks to sail around with you. LOL

[rovo]

The last time I was sailing was on this one. two beautiful weeks sailing around the NE.
www.mysticseaport.org/index.cfm?fuseaction=home.viewPage&page_id=3D49447B-1E4F-379B-604E28D4D8F874EC

[lovetobike]

42% - this includes some $$ I just received from family members and haven't had time to put it to work. Even before the windfall, I had too much as cash.

[Bluerobin]

Rovo, Arch nailed it for me. Thanks for the explaination. I just do what the accountant says.
I am glad to see most of you folks are nearly fully invested. My portfolio is only for investing. I have separate cash "in the bank" for EF, etc. I have always kept most of my portfolio invested and was wondering how normal this is.

[Deleted]

I stay 100% invested in stocks all the time.

[bimetalaupt]

Jan 18, 2011 12:01:02 GMT -5 @oldtex said:

I stay 100% invested in stocks all the time.

OldTex,
Why??? The first thing I learned was to keep a six months supply of cash or liquid assets on tap all the time.. Also makes for great buying when something is too cheap for the cash flow to pass up The Efficient Frontier has been kind to me as has real assets like Oil and Gas... What did I miss,
Thank-you in Advance.
Bi Metal Au Pt

[ModE98]

Lost.. are we talking CASH in the Brokerage account or total cash (like + some bank account) one has available? I always keep cash in bank MM and saving accounts just as an emergency back up. Very little cash in brokerage account... most always 97-100% invested at Scottrade.

[yclept]

Strangely, though I would like to be getting more fully invested in this rising market, I have gone to about 37% cash in the brokerage accounts (from the 30% I was in my post above on Jan 17^th. It's not been by design, but rather my screens have indicated more sells than buys, and I'm still sticking with my position size of about $5k to $6k.
I'm primarily a mechanical investor, so whatever the screens say is what I am determined to do. Nor am I particularly inclined to raise my position size (especially on a day like today when the ports are showing columns of red with only smatterings of green). Still, I might start taking new buys to a position size of $7k to $8k so long as my market indicators continue to signal a positive bias. I won't bother raising current positions to that level as I don't want to spend a $7 commission to add only $1k to $2k to an existing position. Nor does it feel like a good time to increase any of the existing positions to multiples of the single position size (with the exception of the ones that are already multiples). I might just pick up a few dividend payers from the latest dividend screen, which is currently pulling the following tickers: FDI VKQ NLY MFA PTNR TNE CLCT
These all have to be thoroughly investigated for current news or any other anomaly that may be influencing the underlying data the screen is using as selection criteria. Or maybe I just sit pat. The fact that the screens are finding fewer stocks to buy than those to sell may be an early indicator of a market turn. If so, I'll have fewer positions to liquidate than I did earlier, and more cash available to pile into shorting instruments.

[IPAfan]

A little more than 25% of net worth is in cash.

About 20% of total assets.

I've still got a tiny bit more in debt than cash. As the interest rates are rolling up on these 0% credit cards, and I don't feel like the hassle of rolling over credit cards, I'm planning to pay off the credit cards. However, I'm planning to start carrying a decent sized emergency fund especially since I'm self employed and have volatile income. So I'd like to keep cash about where it is or a little higher, and then start paying off debt with new income. Hopefully I will keep my investments the same (or move them, but not withdraw any funds) and start adding again by the end of 2011.

[ModE98]

Unfortunately for now, ZERO. Fully invested.
So I suppose it is time a correction

[Deleted]

current numbers

8% physical silver
14% intl corp bonds
11% cash/mm
47% individual stocks (mega cap dividend worldwide)
15% small cap mutual fund
5% reit

[frankq]

As of today, less than 10%.

In mutuals: 10% Foreign
45% Mid-caps (will probably rebalance to 35%)
20% Small-caps
25% Large-caps ( will probably rebalance to 35%)

Individual issues are mostly 5+% dividend stocks with a couple thousand C just for fun.