Cash

[bitchstewie]

I'm having a bit of a debate with myself over the appropriate level of outgoings to hold as instantly accessible cash in the bank.

Cash in the bank is a drag right now but in the current environment where few things seem certain especially around employers it's good to know I have a few years outgoings covered.

I'm a cautious investor anyway so this isn't a "should I stick it all in PH Recovery?" type question (no offence Julian) it's more a Troy Trojan or LifeStrategy 40 level of volatility.

It's probably a psychology question as much as anything else.

[bitchstewie]

Halitosis said:

Maybe I'm missing something but I don't understand why anyone should keep a few months of outgoings in cash... Most ISAs or fund investments can usually be sold at the press of a button with the cash transferred to your bank account in no more than a few days. Add to this available overdrafts, credit cards and other quickly available debt I see no reason to hold onto a "buffer".
I do understand caution in respect of a market crash, but one can at least put the money into gilts/government bonds where they can earn some return with practically zero risk?
The UK has never defaulted on its bond scheme and government debt is nowhere near as high now as it has been (peaked at the end of the Napoleonic wars according to t'internet)

You sum up my dilemma quite nicely.

It's actually not fear of a market crash as I'm not fully exposed to equities anyway.

And as you say they can be sold at the push of a button and I'd struggle to conceive of any emergency that might need more than a few grand immediately (and even then I can't think of a likely one off hand).

It's just this weird "comfort blanket" that knowing the cash is there gives me.

[bitchstewie]

Simpo Two said:

It would be interesting to see a graph of the spending power of £1 over the last 100 years. Then think - 'would I invest in that?'

Put like that probably not.

As I said though it's perhaps more a question about the "right" amount of cash to sit on rather than the sense of sitting on cash.

[bitchstewie]

PugwasHDJ80 said:

if you want genuine comfort are you not better off holding physical gold?

say you keep 30k in the bank- move 20k to gold and keep 10k cash. Stash the gold in a safe.

When a big crash happens there is invariable a flight to gold, which you still have in your safe because your bank hasn't gone pop.

holding cash in a bank seems no less risky than putting it in a ftse tracker to me.

(yes i know you have 85k coverage in a bank, but that's never been tested, and i'd be willing to be you have to wait a good few months to get it back....)

I'm not looking for zombie apocalypse comfort

The funds I'm in are around 10% physical gold and if I wanted more direct gold exposure I'd probably just buy a gold ETF.

It's literally a loop I go around in every so often of how much is a sensible amount to hold in "there in the bank right now" cash.

God knows what I'd ever use it for though which is sort of the point of the thread i.e. what sort of buffer/cash reserve does everyone else have

[bitchstewie]

xeny said:

I have 1 months pay as cash - some at the house, some elsewhere, so if the entire electronic banking system dies I've got something.

I have another month in my current account - so if my employer fails to pay me for some reason I've got a breathing space.

After that, everything is generally in assets of varying liquidity. If I can't liquidate any of them within two months then I've probably got bigger problems than running short of cash.

I've got a reasonably long notice period, and my employer is very unlikely to be unable to make payroll, so my largest concern is banking system problems.

If the roof blows off, then it gets replaced on the credit card and I decide at my leisure what assets I liquidate to pay it off.

I couldn't be comfortable with "only" a month or two I know that but appreciate you may be.

I've always been of the mentality of don't use credit cards when you have cash but perhaps that's something to explore.

I think the one thing that comes through on this thread is that unless you're literally a millionaire that sort of "cash" bank balance isn't normal or useful.

I'll look at dropping a bit more into the ISA tomorrow I think.

[bitchstewie]

I'll have a look later but any suggestions on a simple credit card where I can just set it up so it pays automatically each month unless I tell it not to?

Just to clarify too I don't mean I walk around paying with literal cash I still literally have the same tenner in my wallet that I had in February

I mean debit card.

[bitchstewie]

Jasey_ said:

I can count on the fingers of 1 hand the number of times I've used a debit card other than getting cash out of the bank (and 4 of those were because I picked the wrong card out of my wallet).

Debit card is for emergencies only.

Especially if you have a load of wonga in your bank account !!!

Are we talking at cross purposes?

I have too much cash in the bank.

I don't walk around paying with cash I use a debit card so it comes directly out the bank.

I thought that was behind the suggestion from some people to use a credit card to cover possible emergencies.

I'm not going to start walking around like Harry Enfield slapping tenners in peoples palms

[bitchstewie]

Jasey_ said:

Not at cross purposes .

If someone steals your debit card details they will steal YOUR cash.

If someone steals your credit card details they will steal the Credit Card company's cash - unless you have been negligent.

This is the reason I do not use my debit card for anything other than accessing my cash.

Ah yes with you now.

That's covered as the bulk of it is in an account that doesn't have a card associated with it.

[bitchstewie]

Timely perhaps.

Cash is Comforting, But a Terrible Investment

[bitchstewie]

xeny said:

bhstewie said:

I'll have a look later but any suggestions on a simple credit card where I can just set it up so it pays automatically each month unless I tell it not to?

.

Pretty much any of the can be set up to do that. Work out which reward scheme is the best fit for you - MSE has a list. It's typically under 1%, but I'll take anything I can get.

So am I being blind or do very few cards seem to shout about you being able to pay it in full each month with no interest?

I'm asking as they don't seem to highlight that on the card company websites.

I get that's because they don't want you to pay it all off but I didn't expect it to be buried on page 76 of the T&Cs either.

[bitchstewie]

mikeiow said:

Well, I stand to be corrected, but I would be willing to bet ALL credit cards will have an automatically-pay-in-full each month option. I doubt they need it in the Ts & Cs
We have a Tesco card (for points - worth less these days), but as others said - pick the best from MSE & apply!
If by some freak of nature you find one you cannot clear each month, send it back: I doubt that would happen

Yeah it's the "and no interest" part I wanted to be sure on.

I haven't had/needed a credit card for years and it's shocked me what the APR on these things is if you intend using it as something that's there as an option to use to buy a few days if you needed to shift money from elsewhere.