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Who is the target audience? People who want to hold 0% of their assets in dollar? I often debate with my friend on what percentage of ones assets one should h

by TekMol 5y ago

Who is the target audience? People who want to hold 0% of their assets in dollar? I often debate with my friend on what percentage of ones assets one should hold in dollars. 0% seems a rather radical choice. I don't know anyone personally who does that. I am not saying it isn't a rational choice. Only that I don't know anyone who does it.

konne88 5y ago
With today's existing banking products, it is indeed basically impossible to keep 0% in cash, because you then couldn't pay your rent etc. On the question of how much money you should keep in cash, I think it really depends on how much savings you have. Most experts recommend a rainy day/emergency fund worth 3-6 months of normal expenses. If you invest that rainy day/emergency funds in a Financial Choice account, it is important to choose an investment strategy with an appropriate risk/reward profile, and adjust the savings target to account for the additional risk from the investments. Betterment has a pretty good writeup on this idea https://www.betterment.com/resources/safety-net-funds-why-traditional-advice-is-wrong/?gclsrc=aw.ds& https://www.betterment.com/resources/safety-net-funds-why-tr....
- notyourday 5y ago
  I do not see a market for this product: * People for whom this product matters ( those who don't have much money and hence should welcome the earning upside no matter how small the interest is, should not use this product because it is an investment account masquerading as a DDA account and could lose value. Having living expenses in an unstable account is just a plain bad financial advice. * People who have a pile of money want their cash to be cash and cash only. They already have exposure to the market via investment accounts with checks/debit cards against them provided by the likes of Schwab, Fidelity, BOA, Chase and their immediate liquidity needs are addressed via revolving credit lines.
nmhancoc 5y ago
You may find most people are actually short the dollar (< 0%) on a net basis. That is, most people hold significantly more dollar-denominated debt than they do assets.

by TekMol 5y ago

konne88 5y ago

With today's existing banking products, it is indeed basically impossible to keep 0% in cash, because you then couldn't pay your rent etc. On the question of how much money you should keep in cash, I think it really depends on how much savings you have. Most experts recommend a rainy day/emergency fund worth 3-6 months of normal expenses. If you invest that rainy day/emergency funds in a Financial Choice account, it is important to choose an investment strategy with an appropriate risk/reward profile, and adjust the savings target to account for the additional risk from the investments. Betterment has a pretty good writeup on this idea https://www.betterment.com/resources/safety-net-funds-why-traditional-advice-is-wrong/?gclsrc=aw.ds& https://www.betterment.com/resources/safety-net-funds-why-tr....

notyourday 5y ago
I do not see a market for this product: * People for whom this product matters ( those who don't have much money and hence should welcome the earning upside no matter how small the interest is, should not use this product because it is an investment account masquerading as a DDA account and could lose value. Having living expenses in an unstable account is just a plain bad financial advice. * People who have a pile of money want their cash to be cash and cash only. They already have exposure to the market via investment accounts with checks/debit cards against them provided by the likes of Schwab, Fidelity, BOA, Chase and their immediate liquidity needs are addressed via revolving credit lines.

nmhancoc 5y ago

You may find most people are actually short the dollar (< 0%) on a net basis. That is, most people hold significantly more dollar-denominated debt than they do assets.