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by forgingahead 2241 days ago
I would actually keep holding it in cash -- that is maybe 2 years of emergency funds if you are married/have a family?

Keep it in cash, pretend you don't have it (create a separate account that is just this sitting there), continue earning and saving. Anything extra you earn after this 80k base you can invest (simple things like index funds, dollar cost average in slowly).
1 comments
basch 2241 days ago
You could put 80K in the stock market, and if you have an emergency borrow against it at 2%.
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forgingahead 2241 days ago
This is terrible advice. Cash is cash, you can pay bills, buy food, get through hard times without needing to do anything but access it. Coronavirus should be showing everyone that random insane things can happen, so be conservative with emergency funds.
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basch 2241 days ago
And borrowing can be same day, same as cash. Or within 30-45 days to pay off a credit card, using it as free float.

The nice thing about borrowing against stock is not having to sell the stock while its down, unless you borrowed so much to hit a margin call. If it's allowed, you could borrow against treasury inflation-protected securities to protect you against runaway inflation. TIPS are up 8% on the year. I'd take 8% gain for 2% cost and peace of mind that my cash isnt losing value.

80K is a lot to have in an emergency fund. Borrowing even a quarter of it should be no problem, without risk of short term margin calls.

I believe pure dollar cost averaging to be a worse choice than picking and filling an allocation with low start date sensitivity and high baseline long term returns. Even averaging in over a year isnt enough time to tackle start date sensitivity, you are better off with an array of stable equivalents, and contributing into just stock allocation over time, as you make more, than holding just cash and waiting to buy stock. Cash by itself is a sure fire way to lose money over time. https://portfoliocharts.com/portfolio/portfolio-matrix/

Some combination of total world stock market, small cap value, reits and bonds/tips, gold, cash, bitcoin. Rebalance quarterly. You'll be much more diversified than holding cash, or holding a cash plus a mutual fund with 90% stock, and cash will still be instantly accessible. It's really not that different in concept than a HELOC, except your collateral is much more diversified than your house.

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