Date: Tue, 4 Oct 2005 10:33:11 CST
From: orpheusNY 
Newsgroups: misc.invest.financial-plan
Subject: Re: Emergency Fund and Asset Allocation
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In article <4rj0f.2613$4h2.2373@newsread3.news.pas.earthlink.net>,
 "Elle"  wrote:
So if

> 
> I am a little baffled. These costs you list are somewhat predictable. Many
> people do plan for them by saving regularly, investing the savings
> conservatively. Yet you seem to be implying that you have the non-retirement
> portfolio (NRP) allocated into, well, stocks. Is this right? This is not a
> good place to put funds you *may* need within five years.

I am a little baffled, too.  If one were to vow not to put money one 
*may* need within five years into equities, then nobody but the very, 
very wealthy would ever invest in equities at all, since there are many 
catastrophes imaginable which could wipe out your average middle-class 
nest egg.


> Sure, your kids might not need orthodontia at all. But you don't know that.
> Cars and major home repairs can be somewhat anticipated, and one should have
> a separate, second fund (call it emergency or NRP or whatever) for them.

We live in a cooperative, so roofs and boilers are budgeted into our 
maintenance payments. I really meant more discretionary stuff like 
kitchen or bathroom renovations. And we certainly are keeping enough of 
a cash cushion to take care of the expected stuff.

> What tool did you use to allocate your NRP? Or, if you wish, just say
> roughly how it's allocated and give some of the reasoning behind this
> allocation.

Right now, excluding the emergency fund, which is in savings bonds, it's 
about 55 percent short term (money market, Cds,  Emigrant Direct, etc) 
and 45 percent equities. If I'm being honest, I'd say that's more the 
product of misgivings about the various non-cash options than reasoning. 
Figuring out where to put savings not needed until the medium-term 
(which I define as 5 to 15 years) has been a real conundrum lately, 
since we aren't particularly bullish on the equity markets, we don't 
want to take any long bond positions in this interest rate environment, 
and real estate, well...

So our cash positions keep edging up, but that doesn't seem wise when 
the likelihood is that that money won't be needed in the next 5 years. 
So we're trying to rebalance, which is why I asked whether we should 
include our significant (to us) cash position in the EF in coming up 
with the right mix.