Cash to equities ratio

RomfordNavy

Just wondering what others think of my current cash buffer:

Cash - 15%
Metals - 5%
Whisky - 13%
Equities - 67%


That 15% is roughly three years spending, if minimised, is this reasonable or an excessive reserve?

jamei305

It depends. If you're currently living off your investments, whisky and metal, then it would make sense to hold some years worth of spending in cash so you don't have to sell a significant chunk of your investments during a downturn.

Prism

In my pension I have 0% cash (or bonds) but in my more accessible accounts it's about 70% cash and 30% equities

Linton

The equity/cash ratio does not mean anything. You should hold enough, but no more, of each to safely meet your objectives.

MaxiRobriguez

You can also use cash as dry powder opportunity hunting as well as spending money.

Chickereeeee

MaxiRobriguez wrote: »

You can also use cash as dry powder opportunity hunting as well as spending money.

...if you think you can time the market.....

masonic

RomfordNavy wrote: »

Cash - 15%
Metals - 5%
Whisky - 13%
Equities - 67%

Surely this should be Rum.

Heedtheadvice

Tee hee

MaxiRobriguez

Chickereeeee wrote: »

...if you think you can time the market.....

No - critics of timing the market assume that people are hunting for a very small window of tops and bottoms.

I currently have a sizeable cash allocation not because I think we're at a top, but because of stretched valuations, declining corporate earnings, high levels of margin, zombie companies kept alive by easy money and the current fashion of growth investing, not to mention various global risks such as Brexit, trade wars etc. Stocks may go up, may go down, and either of those things may happen at any point - I don't know if we're at a top, but my cash portion is a hedge that there is downside risk which *might* move stocks lower, and in that scenario (like in December 2018) I want to be picking up stock whilst others sell off (like I did in December 2018).

Nobody would bat an eyelide if the mixture was stocks/bonds rather than stocks/cash - it would deemed sensible to reduce stock exposure in such scenarios. It's only because it's cash that the tepid "oo err you can't time the market" comes into play. I don't want to invest in bonds at the moment with yields low, prices high and interest rate rise risk a real possibility over the medium term.

Shashy

I'd personally be more concerned about having 3 years' spending tied up in whisky.

That's not the sort of investment that's easily and quickly liquidated (:o)

nick1234

Mine is more like, with the equities being liquid:


Cash 5% (would only last me 3 months)
Equities: 70%
Gold: 10%
BTC: 5%
P2p: 10%.