Pocket cash meaning3/26/2023 So how much cash does Max keep on hand? Here’s a hint. So, although I am sure some of the ideas above are great ones, I tend to stick with things I can easily understand. I don’t consider that liquid cash since I need to jump through a hoop or two to get access to it. For example, my Health Savings Account (HSA) provider requires me to keep $1,000 in cash so I have it in case I need it for medical bills. I do have some little pockets of cash spread out in various accounts throughout my portfolio, but I can’t easily get to it. In other words, my cash allocation refers to cash I can get access to instantly should I ever need it. Now, when I talk about my “cash in my pocket”, I am talking about liquid cash that is not held in a retirement account. But I also think having a solid cash allocation helps me deal with any anxiety that comes up during tough times. In other words, I know better than to sell my total stock market index fund when things get tough. I have enough self-awareness to know I am not going to freak out in a bear market. An unexpected bear market forced me formally define that strategy. But as my net worth grew, strategies needed to change. Once I hit that, I was able to start taking advantage of investing in the stock market. Early on, the goal was to save one month of expenses. I have used several different methods over the years to try to determine how much cash I should have.
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