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Too much in cash

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  • Avatar Peds 
    Participant
    Status: Physician
    Posts: 3614
    Joined: 01/08/2016
    It is a clever fund and I have written an essay on it.  If you want it, PM me.

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    why dont you share with the class…

    #213316 Reply
    Liked by Lordosis
    Avatar Financial Naive MD 
    Participant
    Status: Physician
    Posts: 29
    Joined: 05/05/2019
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    Each month I’m very good at rationalizing why we need to add more to various sinking funds (a car that will need to be replaced 1 year to 5 years from now, a move across the country this summer).

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    Why do you need to move?  If you are changing job, I would keep all your cash as an emergency fund.  Think about investing when you are in a more stable situation.

    #213328 Reply
    MPMD MPMD 
    Participant
    Status: Physician
    Posts: 2106
    Joined: 05/01/2017

    That sounds big enough to dip into if needed. Make it 30.
    Invest the rest.
    Rarely are these expenses true emergencies.
    You just divert cash the few months leading up to the event.

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    This would be exactly my play.

    Really high earners probably don’t need “sinking funds.” You should be able to handle just about anything with a dip into e-fund and a few months of redirected cash flow.

    What’s the worst that could happen? You need a new roof that costs $25k? Pay cash and then re-establish e-fund.

    #213363 Reply
    Liked by Zaphod, Lordosis, Peds
    Lordosis Lordosis 
    Participant
    Status: Physician
    Posts: 793
    Joined: 02/11/2019

    I think the best use for a sinking fund for a high earner is to get someone to actually spend more money.  For those super savers out there that are on the side of depriving themselves a travel sinking fund that they try to spend yearly might be a good thing.  However for the 99.9% of people who spend too much…

    “Never let your sense of morals prevent you from doing what is right.”

    #213366 Reply
    Liked by Tim
    Avatar ZZZ 
    Participant
    Status: Spouse
    Posts: 426
    Joined: 06/18/2018

    “Looking over past 4 years I see our cash position has grown and grown”.

    Just think, while you’ve had 100k sitting in cash/CDs the last 4 years earning 2%…if you’d had it in an S&P index fund, you’d be up 50k…even after cap gains, that’d buy a decent car.

    If your sinking funds help you sleep at night, that’s your choice. Just recognize it comes at a cost.

    #213423 Reply
    Liked by Lordosis, Tim, Peds
    Zaphod Zaphod 
    Participant
    Status: Physician, Small Business Owner
    Posts: 5647
    Joined: 01/12/2016

    That sounds big enough to dip into if needed. Make it 30.
    Invest the rest.
    Rarely are these expenses true emergencies.
    You just divert cash the few months leading up to the event.

    Click to expand…

    This would be exactly my play.

    Really high earners probably don’t need “sinking funds.” You should be able to handle just about anything with a dip into e-fund and a few months of redirected cash flow.

    What’s the worst that could happen? You need a new roof that costs $25k? Pay cash and then re-establish e-fund.

    Click to expand…

    Agree. There is no need unless something serious above a nominal amount is impending.

    A car? Who cares, dip into efund and reestablish, thats kind of what its for. High earners dont need to do this as things like a new car, etc…arent emergencies and as peds mentions you just focus on it at the time or pay it with efund.
    Dont over think it.
    #213855 Reply
    Avatar nephron 
    Participant
    Status: Physician
    Posts: 10
    Joined: 05/09/2019
    Earnest refinancing bonus

    How much cash do you have?  Its hard to invest for things if you do need the cash on a time horizon of less then 5 years.   I have started to place money in the vanguard intermediate govt bond fund to obtain tax free growth with what I think should be low risk for things that i need in that time horizon.  if you still have large student loan balances, you really do not have that much “cash on hand” as it is technically owed to someone else and you should probably just pay that off with extra cash on hand.

    #213936 Reply
    triad triad 
    Participant
    Status: Dentist, Small Business Owner
    Posts: 219
    Joined: 04/29/2016
    It is a clever fund and I have written an essay on it.  If you want it, PM me. 

    Click to expand…

    why dont you share with the class…

    Click to expand…

    https://investor.vanguard.com/mutual-funds/profile/VTMFX

    #213963 Reply

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