Average Portfolio Cash Position

Average Portfolio Cash Position

  • 0 to $20,000

    Votes: 9 18.0%
  • $20,000 to $100,000

    Votes: 22 44.0%
  • $100,000 to $250,000

    Votes: 9 18.0%
  • $250,000 to $500,000

    Votes: 3 6.0%
  • $500,000+

    Votes: 7 14.0%

  • Total voters
    50
Hi all,

With all the market and Somersoft commentary regarding the current state of various property markets (along with people's portfolio compositions), i'm wondering what sort of cash position (not equity) people maintain as part of their portfolios?

I'm currently overweight in cash relative to all my properties/projects that are running however I don't know if this is the best position to be in.

Regards
Al
 
Are you talking total gross or nett after all holding expenses?

And how will other peoples positions make a difference to yours?
 
I figure they feel too much of their networth is tied up in cash and maybe they should have more invested.

Is this thread about risk profiles etc?
 
Are you talking total gross or nett after all holding expenses?

And how will other peoples positions make a difference to yours?

Hi Rixter, i'm coming more from a cash buffers angle in dollar terms vs one's portfolio. For example we're in a reasonable cash position (seven figure) vs our portfolio/projects. Do people maintain low or high cash buffers against their portfolios? Perhaps there is a better metric to use however we try and allocate dollar amounts to our portfolio.

Appreciate the question :)
 
I think it depends very much on what you're hoping to achieve/strategy you're employing. A buy and hold portfolio will need considerably less cash buffer than a developer or even a renovator will. So a bit of context is probably needed.

Also, to me in portfolio terms equity IS cash, as long as it's liquid. It's just as useful as a buffer as cash is.
 
Probably would be looked at more as a percentage/ratio situation.
e.g. on a 10+ mil portfolio, you'd want at least a couple mil floating around for options, probably more if you're a low risk profile.
 
Hi Rixter, i'm coming more from a cash buffers angle in dollar terms vs one's portfolio. For example we're in a reasonable cash position (seven figure) vs our portfolio/projects. Do people maintain low or high cash buffers against their portfolios? Perhaps there is a better metric to use however we try and allocate dollar amounts to our portfolio.

Appreciate the question :)

How is this any different to pullable equity? At the moment we're pulling equity, and storing it in offsets. So, this year we have a significant amount of cash, however our overall portfolio remains similar to several months prior when there was a lot less available cash, as it was just sitting around in lazy equity.
 
I think equity already obtained from the bank sitting in an offset is part of your buffer, equity which hasn't yet been accessed is not because when its needed most in a time of crisis it might not be available. The amount available is highly dependent on your risk tolerance and the stage of your portfolio.
 
I think equity already obtained from the bank sitting in an offset is part of your buffer, equity which hasn't yet been accessed is not because when its needed most in a time of crisis it might not be available. The amount available is highly dependent on your risk tolerance and the stage of your portfolio.

What is in bold there is such an important thing to understand and why I nearly always recommend accessing equity while you can.
 
I think equity already obtained from the bank sitting in an offset is part of your buffer, equity which hasn't yet been accessed is not because when its needed most in a time of crisis it might not be available. The amount available is highly dependent on your risk tolerance and the stage of your portfolio.

Well, yes & no. I often don't have much of a buffer sitting in offsets, I just let it ride, unless I need it for anything in particular, then I do a draw down. BUT I do have to mention that I'm sitting in a very cashflow positive position, with Hubby in a stable job and virtually no expenses.

I've only changed that recently, as he's about to leave the job soon. Not sure exactly when, but it will be soon. At this stage in the cycle, I'd be pulling equity to go again, but this time I'm pulling equity to sit in offsets, so that if I want to buy something later, without the job, I can.
 
$$$ amount is all relative. I like to keep minimum of 6 months interest across whole portfolio at IO. Have access to 'available equity' would also need to be considered IMO. By available I mean already processed by the bank, funds available in LOC, Offset or Redraw... not just available based on your calculations of your valuations/equity.
 
$$$ amount is all relative. I like to keep minimum of 6 months interest across whole portfolio at IO. Have access to 'available equity' would also need to be considered IMO. By available I mean already processed by the bank, funds available in LOC, Offset or Redraw... not just available based on your calculations of your valuations/equity.

Mine is 10+ years worth lifestyle budget as a buffer.
 
I like to keep $10,000 buffers for each property (low priced properties under 300k).

This basically covers 6 months payments for interest and maintenance costs.
 
Over the last few years, any refinance opportunity that could release enough equity to buy another property I have used agressively to accumulate a larger asset base....part of my plan 10 years ago.

Up until recently we had very little cash sitting around in savings/offset accounts, I always looked at it as money that wasnt working hard enough for us.

Lately I've been hoarding all my cash in our offset against our PPOR and reassessing where we go for the next 10 years.

Sit and let time do its thing or buy more property, or look at shares?

So buffers are relative to the stage and phase of your investing ultimately
 
I think a good way to look at this would be how long could you sustain your lifestyle and property's if all income stopped today.

That's it exactly, Weejimmy.

For the majority of people, both with or with out property, I'd hazard a guess and say it would not be very long.
 
We need 1/2 mil to last 12 months, but that kind of catastrophe is unlikely.
And if it does, even better, the opportunities will open up all over the place.
When others retreat, that's the time to dominate !!!
 
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