[icedchai]

I keep roughly 10% of my net worth in cash... That equates to several years of expenses. It may be excessively high but it lets me sleep at night. You joke, but the past year shows something like a zombie apocalypse is a possibility.

[Moodles]

Yeah as I say, it's fine to do whatever you want with your money to provide emotional comfort. I'm merely saying it's a psychological bias you may want to be aware of.

I mean, you chose a 10% figure. Why 10%? Why not 20% or 5%? I think it's helpful to really think through the math sometimes.

[icedchai]

Yes, you're right... Mathematically, I know I can be fine with less, it just makes me feel uneasy. I was actually trending towards a lower percentage, but I got scared and depressed earlier in the year. I sold off some poorly performing stocks and ETFs, giving me some more cash cushion. It felt like the sh*t was really hitting the fan. It still does, in many ways, just not for my investment accounts. When (if?) things "go back to normal" I will re-assess...

[Moodles]

I suspect if you know not to trust yourself to stay the course when the sky is falling, then you are in fact probably better off in the long-run with a less risky asset allocation. There’s plenty of evidence out there to show that the more you buy/sell/tinker, the more likely you are to get worse returns. Literally the best investors are dead people. So if you need some % of cash or bonds to stay the course and do nothing, that’s good. Which shows some self awareness and maturity. Ideal would be to dispassionately follow the math, but your strategy is the next best thing.

[twblalock]

> You joke, but the past year shows something like a zombie apocalypse is a possibility.

For me the past year shows that the economy has been more resilient than most people expected, that the Fed is willing to drop rates to zero in order to keep it that way, and that the stock market actually goes up when that happens because it is the only investment that might return more than a fraction of a percent.

If you are going to keep that much in cash, I might suggest putting some of it in inflation-protected securities like I-bonds. They are backed by the US government, and I can't forsee a situation where the government could default on them without the value of the dollar also tanking. They are better protected from inflation than money in a savings account.

[icedchai]

I agree with what you say about the economy. I am also impressed by the resilience there. My apocalypse comment was more in reference to the non-economic aspects... sickness, death, isolation. I put on the news and it's awful. Working-from-home has also really worn me out. Many nights, I have trouble sleeping.

I will look into something like the I-bonds more seriously.

[lotsofpulp]

In the very worst scenario, you’re going to need guns, source of food, land, and most importantly a network of people who you can call to help defend you (or go on offense with you to acquire necessary resources).

The dollar is only useful as long as the US government continues to perform as an organization. However, as the US approaches dissolution, I would expect the value of USD to approach zero as the government increases the supply of money and prospective owners of the currency lose trust in its ability to retain value in the future.

[marvin]

>or go on offense with you to acquire necessary resources

Are you seriously suggesting, on a hacker forum, to be prepared to use the proceeds of your emergency fund to violently steal life-critical resources from other people in a crisis?

I really hope I've misunderstood, and you're using the phrase "go on offense" as a euphemism for deer hunting.

[lotsofpulp]

No, I am suggesting that in a worst case scenario, an emergency fund full of cash is useless (on a multiple year timescale, of course how many years is subjective).

It’s conceivable to imagine a scenario where resources are so limited that acquiring them becomes a do or die situation, which is what I imagine the previous poster meant by “zombie apocalypse” scenario (or more realistically, war). Or I erroneously assumed “zombie apocalypse” to mean worst case scenario.

I also forgot to include a less drastic measures of also owning assets in a different country and the rights to live there in case you need to immigrate.

[icedchai]

This is true. However, I think there are a variety of scenarios, less extreme than total societal collapse, where it still may be useful to have a large emergency fund. It may not be rational.