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There's something to be said for having cash available - here and there, opportunities pop up for me that I can take advantage of. For example, recently I lent
by cko 11y ago
There's something to be said for having cash available - here and there, opportunities pop up for me that I can take advantage of. For example, recently I lent money at very high interest, short-term. If I suddenly get interested in prototyping electronics I won't even hesitate to buy an Arduino, sensors, and a few books. Little bits of cash is useful to "try things out."
Plus there's the "better sleep at night" factor.
People with little to no cash won't likely consider these things. Having that cash won't likely give you any good return, but there's the "freeing up your mind", "capitalizing on opportunities", and "sleeping better" things to consider.
- forgetsusername 11y ago>There's something to be said for having cash available - here and there, opportunities pop up for me that I can take advantage of. But, by definition, every time you take advantage of an opportunity, you sacrifice cash on hand. You can't always have cash on hand and always be able to take advantage of opportunities, unless you have infinite money. They are opposing forces; your money is either "in cash" or "in opportunities". It reminds me of arguments to have "dry powder" to buy equities when there is a market correction. But that means you're sacrificing current returns for potential future returns, and unless you can anticipate the future market results, the results of the strategy are ambiguous.
- mod 11y agoWhat? You don't have to take advantage of every opportunity. I generally buy anything that sparks my interest, and manage to bank a lot more cash than I spend.
- forgetsusername 11y ago>You don't have to take advantage of every opportunity. That's irrelevant. The point is, strategies like, "always have cash on hand to take advantage of opportunities" don't really make sense, because the more you do of one means the less you can do of the other. This is economics in a nutshell; determining the tradeoffs between two scarce resources, in this case cash and "opportunities". The solution isn't "more of both" unless the resources are infinite.
- russell_h 11y agoSure, but there aren't many reasons not to keep that cash in a checking account. For a while I just kept all of my cash in a checking account because it actually paid a higher interest rate than my savings account from the same bank.
- imperialdrive 11y agoI resonate with your comment. Thank you. I value sleep over all things. My life and daily decision making revolves around "Will I lose sleep over this?" I sleep sooooo well at night. Sometimes I wonder if the richest and most powerful people in history sleep this well? Hehe, having a couple years of travel in savings works wonders :-D