How much cash for house emergency?

PixelPound

https://forums.moneysavingexpert.com/discussion/comment/82148365#Comment_82148365

There's been studies such as https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4590406 that show why keeping 100% equities can be far better than any lifestyle funds or balanced (e.g. 60/40).

Having a fair amount of cash does mean you can withdraw less in downturns, so you should be able to weather having 100% equity.

leosayer

Having enough cash to weather equity downturns doesn't seem like 100% equity to me.

Linton

https://forums.moneysavingexpert.com/discussion/comment/82150211#Comment_82150211

In retirement one has a range of incompatible objectives. I have found the best strategy is to allocate appropriate amounts of money to 3 completely separate buckets each optimised for a restricted purpose. This is much easier to manage and leads to better asset allocation than having one portfolio that attempts to meet all needs.

Hence the growth portfolio is 100% equity and is not designed nor called upon to generated ongoing cash payments. Its purpose is to ensure income increases with inflation over the long term by buying income funds. Hence market volatility is irrelevent and can be ignored.

A second portfolio is designed to generate a high level of steady ongoing income and only contains equity, bond and infrastructure income funds. Since income is the over-riding objective changes in capital value are irrelevent and can be ignored.

Finally there is the "cash" portfolio into which all income is placed and from which all expenditure is taken. Since income exceeds expenditure the portfolio will naturally rise over time to cover one-offs but it also can be occasionally rebalanced from the growth portfolio. Here safety and accessibility are the over-riding requirements.

So overall you will see that the right allocations to the various asset classes are made and ongoing expenditure is completely shielded from market volatility.

enthusiasticsaver

It depends on circumstances. If you are working then 6 months outgoings is a decent emergency fund. We are retired and keep minimum £15k in cash savings. If you have investments you can usually still access them though. We recently installed solar panels and rather than clear out our cash savings we withdrew from our investment portfolio as it has performed well over the last three or four years. Of course if we were in a dip I may have thought twice about that.