Cash - How Much to Keep?

[Aminatidi]

This old chestnut again.

I have £215K invested.

I have £40K across "instant access" bank accounts paying bugger all.

I have £19K in some NS&I index linked certs.

Stable job (until it isn't) bringing in around £3K/month net.

Outgoings of £1000/month + any discretionary.

How much would you keep in "instant access"?

I've used ISA allowances so if it went into anything it would be PNL/CGT/RICA on the basis that if I needed money unexpectedly quickly I'd risk the hit.

[Arborbridge]

This old chestnut again.

I have £215K invested.

I have £40K across "instant access" bank accounts paying bugger all.

I have £19K in some NS&I index linked certs.

Stable job (until it isn't) bringing in around £3K/month net.

Outgoings of £1000/month + any discretionary.

How much would you keep in "instant access"?

I've used ISA allowances so if it went into anything it would be PNL/CGT/RICA on the basis that if I needed money unexpectedly quickly I'd risk the hit.

I wouldn't tolerate the bugger all. I'd rather take on some risk with nearly all of that. Even the linkers are a bit too much to my way of thinking.

Arb.

[Arborbridge]

BTW, when I decided to carrry less cash, I stashed some of it into the Invesco Perpetual Monthly income plus OEIC. It has a mixture of fixed interest, bonds and 20% in equities. I must say it's done just what I wanted over the past ten years. Its total return has been around 4.5% which is certainly better than "bugger all" for an increase in risk I can tolerate. In fact, during lock down it has faired rather well and the fund is one of my biggest holdings having overtaken City of London on the way down!

I'm sure people will have even better recommendations and funds like PNL, RIT and others that you suggest could be alternatives worth checking.

Arb.

[Aminatidi]

Yes it's not so much a "risk" thing here as I'd be comfortable with all of it in PNL/CGT/RICA type investments.

It's about what level of "i can get at it right away" cash people are comfortable with v anything (even notice accounts) that take some time to realise.

Different things I think?

[mc2fool]

How much would you keep in "instant access"?

Well, of course, the "safe" vs "risk" assets level (that his thread has, perhaps predictably, dived straight into) is a very personal situation and attitude dependent matter, but as this is the bank accounts savings board (rather than the non-existent asset allocation board!), and getting onto your "what level of "i can get at it right away" cash people are comfortable with v anything (even notice accounts) that take some time to realise", which it seems was the real question you were asking....

Well, of course, that's very personal situation and attitude dependent too. But one approach you could take is to try and figure out how much you'd like to have in instant access in case of an immediate-needs emergency (e.g. expensive car repairs), and then how much you'd need for an "ongoing" situation and when you'd need it, and then use notice/fixed term a/cs to provide for that.

E.g. if you have £1000/month of outgoings then to protect against losing your job and it taking a while to get another, you might put at least £3k into instant access and another £3k into a 3 month notice a/c, a further £3k into a 6 month notice a/c, etc. Or you might instead use a rolling set of fixed term accounts, e.g. four 1 year fixes spaced at 3 month intervals that you renew on maturity if not needed. Either of which would make funds available as needed (for this purpose) and should get you a slightly bigger bugger all.

Another thing you could try looking for is fixed term accounts that allow withdrawals with a penalty. E.g. it used to be not so unusual for some 1 year fixed accounts to allow withdrawals with a loss of 90 days interest, although I don't know of any offhand like that right now.

Personally I'd bung at least some into Premium Bonds ... pretty much the best rate in aggregate for instant access right now ... YMMV!

[Urbandreamer]

I don't really like "cash", hence carry a lot less than you.

Currently about £8k in the current account and £6k in broker's accounts. That's it.
I personally think of broker accounts as somewhat like a notice account. You can get the money within a week (5 working days).
If I need more I could spend on the credit card then pay the bill off having sold some investments.

Interest, what interest?

I use to carry even less a few years ago, but at the moment like the flexibility of the current levels (though I'm tempted to invest the funds that are in the broker account).

I don't think that there is a "right" answer to this question. If we were to assume that there could be a right answer, then that "right" answer would be different over time. Currently MPT is being tested as the "risk free rate of return" is negative. Possibly the "right" answer is whatever you are comfortable with.

[Itsallaguess]

This old chestnut again.

I have £215K invested.

I have £40K across "instant access" bank accounts paying bugger all.

I have £19K in some NS&I index linked certs.

Stable job (until it isn't) bringing in around £3K/month net.

Outgoings of £1000/month + any discretionary.

How much would you keep in "instant access"?

I've used ISA allowances so if it went into anything it would be PNL/CGT/RICA on the basis that if I needed money unexpectedly quickly I'd risk the hit.

I'd take it a little slower and initially just look to get somewhere with this where you still feel comfortable, and not rush into going too far the other way and leaving yourself overly concerned too soon in that process...

I think these sorts of things are actually very personal, and whilst big suggested leaps might look really persuasive on paper, they often feel very different once the 'acting out' part starts to happen, if those plans aren't well aligned with our own investment-sensibilities...

Investing £20K from the £40K in the instant access account would still leave you with a rough 18-month 'instant access' spending fund (£20K / 18 months = £1111 per month), and still leave you with the remaining £19K in your NS&I linkers, which might provide an additional 18-months spending if it were ever needed to be called upon...

If you moved that £20K from the instant-access accounts and into Premium Bonds, then you might expect an interest rate of around 1% (https://www.nsandi.com/interest-rates) with a chance of more, and this would then leave the remaining £20K in the instant-access account to perhaps be available for more productive investments...

Taking a fairly meaningful step of reducing your near-cash allocation from around £60K to £40K might be a good first-step to take here, rather than trying to get down further in a quicker way that might then cause too much anxiety at this stage...

I say the above as someone who's still working and building my investments, and have always had a '3 x basic requirements' near-cash fund in mind for when I retire, but on a recent thread where this subject was also raised, two long-term retirees gave me pause for thought regarding their own valuable experiences -

https://www.lemonfool.co.uk/viewtopic.php?f=31&t=26289&p=358077#p358077

So even three-years living-expenses may well be over-egging things, and I intend to think more on that specific subject anyway, taking the above thread into account, but given that you might be able to rotate £20K of instant-access cash into more productive investments at the same time as still *satisfying* that three-year level, then it might be a step that feels appropriately palatable for now, and see how you get on acclimatising to that 'first-step' position...

You could even do the above in 2 x £10K stages, just to baby-step your way even slower.

There's a *lot* to be said for being able to sleep at night...

Cheers,

Itsallaguess

[Aminatidi]

You could even do the above in 2 x £10K stages, just to baby-step your way even slower.

There's a *lot* to be said for being able to sleep at night...

Cheers,

Itsallaguess

I'm selectively quoting but that was my broad thinking and still is.

I might even go with 4x £5K stages but same principle.

As you say there is indeed a lot to be said for being able to sleep well and I'm very conscious this is a very first world problem that many people would give their eye teeth for.

[Aminatidi]

Another thing you could try looking for is fixed term accounts that allow withdrawals with a penalty. E.g. it used to be not so unusual for some 1 year fixed accounts to allow withdrawals with a loss of 90 days interest, although I don't know of any offhand like that right now.

I think my view on any savings account is that interest rates right now are so poor that respectfully unless I've no income coming in it just doesn't seem worth the hassle for a few bps a year extra interest on "just" £20K right now.

I'd sooner either have it instantly accessible or somewhere where it's at least hopefully working for me.

[mc2fool]

Another thing you could try looking for is fixed term accounts that allow withdrawals with a penalty. E.g. it used to be not so unusual for some 1 year fixed accounts to allow withdrawals with a loss of 90 days interest, although I don't know of any offhand like that right now.

I think my view on any savings account is that interest rates right now are so poor that respectfully unless I've no income coming in it just doesn't seem worth the hassle for a few bps a year extra interest on "just" £20K right now.

Yeah, I understand. I've all but given up on actively rate tarting myself, only looking around for replacements when an existing a/c changes or matures ... although I will be moving my NS&I dosh soon to be earning only 0.01% from Tuesday to accounts earning (drum roll) 0.70-0.75%. Wow, eh?!

[stevensfo]

Another thing you could try looking for is fixed term accounts that allow withdrawals with a penalty. E.g. it used to be not so unusual for some 1 year fixed accounts to allow withdrawals with a loss of 90 days interest, although I don't know of any offhand like that right now.

I think my view on any savings account is that interest rates right now are so poor that respectfully unless I've no income coming in it just doesn't seem worth the hassle for a few bps a year extra interest on "just" £20K right now.

Yeah, I understand. I've all but given up on actively rate tarting myself, only looking around for replacements when an existing a/c changes or matures ... although I will be moving my NS&I dosh soon to be earning only 0.01% from Tuesday to accounts earning (drum roll) 0.70-0.75%. Wow, eh?!

The AJBell (Youinvest) Savings Hub is offering fixed-term rates as high as 0.8% at the moment, though that is a 5 year rate with Oaknorth which I can't imagine attracting many people.
The next one is an 18 month fixed term 0.79% rate with Aldermere.

So slightly louder drum roll.

....though 0.79% is still not enough to pay for a new drum.

Steve

[PinkDalek]

The AJBell (Youinvest) Savings Hub is offering fixed-term rates as high as 0.8% at the moment, though that is a 5 year rate with Oaknorth which I can't imagine attracting many people.
The next one is an 18 month fixed term 0.79% rate with Aldermere.

So slightly louder drum roll.

....though 0.79% is still not enough to pay for a new drum.

Steve

When I last looked Close Brothers were offering 5 year fixed rate at 1.3% https://www.closesavings.co.uk/personal/historic-interest-rates.

Some other fixed term offers here https://www.thisismoney.co.uk/money/article-1621507/Best-savings-rates-Fixed-rate-accounts.html.

[mc2fool]

I think my view on any savings account is that interest rates right now are so poor that respectfully unless I've no income coming in it just doesn't seem worth the hassle for a few bps a year extra interest on "just" £20K right now.

Yeah, I understand. I've all but given up on actively rate tarting myself, only looking around for replacements when an existing a/c changes or matures ... although I will be moving my NS&I dosh soon to be earning only 0.01% from Tuesday to accounts earning (drum roll) 0.70-0.75%. Wow, eh?!

The AJBell (Youinvest) Savings Hub is offering fixed-term rates as high as 0.8% at the moment, though that is a 5 year rate with Oaknorth which I can't imagine attracting many people.
The next one is an 18 month fixed term 0.79% rate with Aldermere.

So slightly louder drum roll.

....though 0.79% is still not enough to pay for a new drum.

Steve

I was talking about instant access accounts, although admittedly the 0.70-0.75% is with existing but no longer available to new customers accounts I already have; 0.7% with Marcus and Kent Reliance, 0.75% with Shawbrook.

I do see that 0.7% instant access is available from Saga though (which is actually Marcus). The AJBell offerings don't look competitive when you compare them with https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/

[Wuffle]

If the stable job just ended, would it come with a payout?
After risk assessing that, there is a case for holding less cash.
A couple of acquaintances find themselves in that position as we speak (hospitality).
Returns on cash are just a diversion. If the brown hit the fan, a working age individual would do some work, cash returns are a rounding error.
The question is what to hold to get me to some meaningful income and that is all about the individual.

For perspective, I work with people on temporary contracts who wait at cashpoints late on Thursday nights to access their wages going in 'on Friday' to keep the hamster wheel spinning.
Another world.

W.

[Aminatidi]

If the stable job just ended, would it come with a payout?
After risk assessing that, there is a case for holding less cash.
A couple of acquaintances find themselves in that position as we speak (hospitality).
Returns on cash are just a diversion. If the brown hit the fan, a working age individual would do some work, cash returns are a rounding error.
The question is what to hold to get me to some meaningful income and that is all about the individual.

For perspective, I work with people on temporary contracts who wait at cashpoints late on Thursday nights to access their wages going in 'on Friday' to keep the hamster wheel spinning.
Another world.

W.

I work for a company with a large global parent company so I would have few concerns there.

Even if it's statutory I've been there years so it would be around a years living expenses.

I agree with your final point about "another world" and believe me I'm very aware how much of a first-world problem this is v many people.

[Aminatidi]

Right well £7.5K has gone into Ruffer.

Won't get rich but shouldn't get poor.

Will keep feeding in more in small (ish) chunks and see where I end up around comfort levels on the bank balance.

Seems consensus over several forums is to keep the NS&I linkers.

[bluedonkey]

As a general rule, just keep the equivalent of 6 months expenditure in cash, maybe 9 months to be on the safe side. Can't see much point in having more than that during the saving/accumulation phase of investing.

[GrahamPlatt]

£50Bn seems to be the answer

https://www.theguardian.com/business/20 ... -banknotes