Cash in the bank?

[bitchstewie]

I have a very first world problem of too much cash in the bank, many years worth of living expenses.

I have a S&S ISA which is maxed out and I have a non-wrapped investment account that I'm slowly putting money into, in a variety of "lower risk" funds and investment trusts.

At what point do you start to feel uncomfortable with market exposure v "cash in the bank"?

The balance is just into six figures which by any standard isn't an amount I'm likely to need "tomorrow", so my question is, I guess, more around the psychology of looking at a bank balance sheet vs. an investment balance sheet.

Even with low risk funds and trusts there's a comfort blanket in a big fat "cash" that I'm struggling a little to get over.

I think "fk you money" sums it up.

Debt free, steady salaried income so this isn't a drawdown/retirement "making the pot last" type situation.

[The Mad Monk]

bhstewie said:

I have a very first world problem of too much cash in the bank, ................

The balance is just into six figures ............

Do you mean that you have in excess of £100,000 in your current account?

Unless you are about to put a deposit on a property, or buy a fairly expensive car, I suggest that is far too much. Apart from anything else, it's all nickable, isn't it?

[Darlo74]

If you've exhausted your limits to invest in your pension as well as ISA one option is to buy Premium Bonds. £50k limit per person and you have a chance of winning big, and on average will return around 1.4% if you have the max invested. Easily accessible and not wasting away in a bank account...

[DonkeyApple]

bhstewie said:

I have a very first world problem of too much cash in the bank, many years worth of living expenses.

I have a S&S ISA which is maxed out and I have a non-wrapped investment account that I'm slowly putting money into, in a variety of "lower risk" funds and investment trusts.

At what point do you start to feel uncomfortable with market exposure v "cash in the bank"?

The balance is just into six figures which by any standard isn't an amount I'm likely to need "tomorrow", so my question is, I guess, more around the psychology of looking at a bank balance sheet vs. an investment balance sheet.

Even with low risk funds and trusts there's a comfort blanket in a big fat "cash" that I'm struggling a little to get over.

I think "fk you money" sums it up.

Debt free, steady salaried income so this isn't a drawdown/retirement "making the pot last" type situation.

Cash is still an investment class. So firstly, in any year it isn’t necessarily a bad investment. There are plenty of years where it can hugely outperform other asset classes but I think on the whole, over the longer term it has less value.

Conversely, as an asset class it’s weighting against your equity and other investments looks likely to be very low, single digit so from a perspective of weightings it seems absolutely fine.

£100k cash alongside a £100k equity portfolio would suggest an imbalance depending on personal circumstances. The same £100k next to a £2m equity portfolio would not.

You also need to fully understand your lifestyle, work and ability to access assets before you can truly determine if the cash investment is over weight. For example, There are plenty of people who will be retired by their industry years before they ever planned to retire and the timing may not be correct to crack open the pension so being able to artificially replicate an income from cash to bridge that time gap could be very valuable.

[mikeiow]

The Mad Monk said:

Do you mean that you have in excess of £100,000 in your current account?

Unless you are about to put a deposit on a property, or buy a fairly expensive car, I suggest that is far too much. Apart from anything else, it's all nickable, isn't it?

Nickable? We nearly lost more than that in the great Icelandic banking crisis in years gone by....but thankfully were saved.
Not sure how you figure out it is all nickable? Sure, the £85k limits apply.....

I’d dump £50k into premium bonds as easily accessible cash....& then it depends, as others say, on your general asset situation.....& approach to risk.

[red_slr]

If you are married the govt protection is 2x.

FWIW.

[FredAstaire]

mikeiow said:

Not sure how you figure out it is all nickable?

By fraudsters. Has happened to someone I know recently. ALL their money. All their kids money. Phones etc taken out in their name. Mortgages taken out in their name.

It has been a very stressful and slow process to unwind, as once the fraudsters were 'in' they closed the original accounts, PACed the phone numbers etc.

[rich12]

FredAstaire said:

By fraudsters. Has happened to someone I know recently. ALL their money. All their kids money. Phones etc taken out in their name. Mortgages taken out in their name.

It has been a very stressful and slow process to unwind, as once the fraudsters were 'in' they closed the original accounts, PACed the phone numbers etc.

Mortgages?
I can't believe that can still happen.

[red_slr]

FredAstaire said:

mikeiow said:

Not sure how you figure out it is all nickable?

By fraudsters. Has happened to someone I know recently. ALL their money. All their kids money. Phones etc taken out in their name. Mortgages taken out in their name.

It has been a very stressful and slow process to unwind, as once the fraudsters were 'in' they closed the original accounts, PACed the phone numbers etc.

In which case money is not safe anywhere, so other than keeping it buried in a field somewhere in £ notes you have no chance.

Sounds to me like someone is either good at fraud or has exaggerated their story or has a very bent solicitor who is going to prison for a long time.

[FredAstaire]

red_slr said:

In which case money is not safe anywhere, so other than keeping it buried in a field somewhere in £ notes you have no chance.

split it up a bit more - not have all eggs in one basket.

they had ALL their money, all their kids money, etc with one bank.

[bitchstewie]

The Mad Monk said:

Do you mean that you have in excess of £100,000 in your current account?

Not literally in my current account, but a generic bank account yes.

One that isn't linked to any kind of debit/credit card.

[bitchstewie]

DonkeyApple said:

£100k cash alongside a £100k equity portfolio would suggest an imbalance depending on personal circumstances. The same £100k next to a £2m equity portfolio would not.

You also need to fully understand your lifestyle, work and ability to access assets before you can truly determine if the cash investment is over weight. For example, There are plenty of people who will be retired by their industry years before they ever planned to retire and the timing may not be correct to crack open the pension so being able to artificially replicate an income from cash to bridge that time gap could be very valuable.

Thanks

Keeping things generic and not wanting to go into loads of personal details, do you have a few examples please?

[Scootersp]

bhstewie said:

Not literally in my current account, but a generic bank account yes.

One that isn't linked to any kind of debit/credit card.

Same, I have a low risk, "don't spend it protect it" attitude. So some cash ISA's (foolish looking back but I just wasn't really FTSE/shares clued up and it's hindsight to some degree that I'd have done well and now, for me, it's more risky now as we may be due a fall back) premium bonds and I set up an account with another bank.

I did this to get a 4% introductory interest rate, but also to have another debit card after the online banking downtime TSB (?) customers experienced, so i'd definitely recommend that if you are with just the one bank.

[NickCQ]

bhstewie said:

Thanks

Keeping things generic and not wanting to go into loads of personal details, do you have a few examples please?

The classic one is professional footballers but traders can have the same dynamic as well.
Of course, in the good old days they would have made enough money by 40 not to have to worry about all that

[outnumbered]

bhstewie said:

Not literally in my current account, but a generic bank account yes.

One that isn't linked to any kind of debit/credit card.

The obvious thing is to ensure you've got it split across at least a couple of institutions to avoid the £85K gov't insurance limit.

[anonymous-user]

Put it in a unit trust that's feeding into your ISA on a yearly basis?
that way it's accessible but also working for you.

Money in an ISA is easily accessible so not sure why you need it as "cash"

[bitchstewie]

keirik said:

Put it in a unit trust that's feeding into your ISA on a yearly basis?
that way it's accessible but also working for you.

Money in an ISA is easily accessible so not sure why you need it as "cash"

My ISA is maxed out already.

I don't need it as cash, it's more a psychological thing, as hinted at in the OP

[NickCQ]

bhstewie said:

My ISA is maxed out already.

I don't need it as cash, it's more a psychological thing, as hinted at in the OP

Wait until April - you can get £100k in over 5 years (less if you are married).

[JapanRed]

I’d make sure I was within the government protection threshold for starters.

Then as others have said it depends what % of your net worth that £100k is. If it’s 1% then no big deal. If 80% then it’s terrible to hold that much in cash.

What’s your horizon for needing it back?
Are you ever likely to need it? If you don’t need it for 10 years I’d consider investing it. If less than 10 years I’d just stick with high interest savings accounts.

Could you help kids thru uni or paying off their debts or a help to get on the housing ladder?

You can still invest more than £40k per year into pensions, just not as favourably. So still consider that.

[bitchstewie]

JapanRed said:

Then as others have said it depends what % of your net worth that £100k is. If it’s 1% then no big deal. If 80% then it’s terrible to hold that much in cash.

Pretty much 50% so far as things that are liquid and essentially "cash".

Again, not wanting to get overly into personal info on a public forum so appreciate everything being discussed is massively general.