[USER]

The reason to have it, I think, being to buy stocks when a crash comes, so you “buy the dip.”

(And obviously I’m not talking about checking account daily/monthly expenses cash.)

[Mike]

Time in the market > timing the market. If it’s money you don’t need for 5+ years, it should be invested. You’ll look back and wish you bought at the 2024 price.

[Amy]

3 year’s worth of expenses in cash by retirement. So, if the market dips you do not have to drawn on a down market.

Cash for buying on the dip, not much. Just buying as I go. Set it and forget it.

[Mike]

Depends on your age. Still working and in your prime, at least 6-9 months of expenses. Close to retiring or retired -> 4 years of expenses in a mix of money market funds, short term CDs, bonds etc. Why? You are funding your retirement by selling shares.

You are not buying/accumulating more shares as you are retired (no source of income). If markets tank 30% or 40% and stay depressed for 1-2 years, you need to sell more shares to meet your monthly expenses. Now you may not have funds in your 90s.

So, when that crash happens, use the emergency funds and live on a very tight budget, keep your shares until markets bounce back. Then resume your selling (now not as many shares) to meet your monthly expenses.

You’ll also need to refund that emergency fund again for the next “big” correction.

Proposed: How many years to double portfolio using Rule of 72?

[Sharon]

I have 3 years expenses worth in CDs, cash, treasury. Not necessarily for buying a dip.

[Kelly]

We keep 3+ years of expenses in cash or cash equivalents.

[Aaron]

I don’t hold funds to buy when there’s a dip. My money for stocks goes into stocks and I am not monitoring when there’s a dip or not.

Not saying that’s the objective best way to do it that’s just how I do it. I’m not looking to spend a lot of time monitoring the stock market.

Read on: Is there a way for me to manage my portfolio myself, avoiding the high fees?

[Nick]

I don’t try to time the market. We just keep putting money in, as much as we can. That disciple is better than anything you can do with timing.

[Kasper]

I am running my investment in a LLC (in Europe), with a small credit facility on top – which means zero cash at any time, I use the credit for living during the year and then make a dividend payment every year from my holding company which match last year cash burn.

So, bring the credit down to zero in Jan ever year.

[Author]

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