How much in cash equivalents should I keep in the bank? [duplicate]
In personal finance circles this is called an Emergency Fund. There are many opinions about how big it needs to be but most seem to come in around 3-6 months worth of your average expenses. Any more than that and you're going to loose money to inflation, less and you will start having problems if you get laid off or have a medical issue.
"It's also worth thinking about minor ""emergencies"" when the location of your cash may be more important than the amount. I keep a baggie of change and small bills in my glovebox for meters and tolls. I keep a ten dollar bill in my armband when I go out for a jog or bike. Those little stashes have saved me more than once. Zombie apocalypse money? I just have a couple hundred at home." Money laundering alarms would definitely be raised, way before you walking in with the cash to deposit. Every cash transaction over $10K will be reported by the bank (and not only banks have to report), so the report will be sent when you withdraw the money, as well. But if the money is legitimately yours and you can show the sources, then you shouldn't be worried. There's no law against having cash. Its just very hard to track down the cash money sources, and if someone asks you and you cannot show the proofs - the problem would definitely be yours. Line one shows your 1M, a return with a given rate, and year end withdrawal starting at 25,000.  So Line 2 starts with that balance, applies the rate again, and shows the higher withdrawal, by 3%/yr.  In Column one, I show the cumulative effect of the 3% inflation, and the last number in this column is the final balance (903K) but divided by the cumulative inflation.  To summarize - if you simply get the return of inflation, and start by spending just that amount, you'll find that after 20 years, you have half your real value.  The 1.029 is a trial and error method, as I don't know how a finance calculator would handle such a payment flow. I can load the sheet somewhere if you'd like.  Note: This is not exactly what the OP was looking for. If the concept is useful, I'll let it stand. If not, downvotes are welcome and I'll delete. "First thing is that your English is pretty damn good.  You should be proud.  There are certainly adult native speakers, here in the US, that cannot write as well. I like your ambition, that you are looking to save money and improve yourself.   I like that you want to move your funds into a more stable currency. What is really tough with your plan and situation is your salary.  Here in the US banks will typically have minimum deposits that are high for you.  I imagine the same is true in the EU.  You may have to save up before you can deposit into an EU bank. To answer your question:  Yes it is very wise to save money in different containers.  My wife and I have one household savings account.  Yet that is broken down by different categories (using a spreadsheet).  A certain amount might be dedicated to vacation, emergency fund, or the purchase of a luxury item.  We also have business and accounts and personal accounts.   It goes even further.  For spending we use the ""envelope system"".  After our pay check is deposited, one of us goes to the bank and withdraws cash.  Some goes into the grocery envelope, some in the entertainment envelope, and so on.   So yes I think you have a good plan and I would really like to see a plan on how you can increase your income." If you want to keep any consistent standard, you need to knuckle down and make those transaction entries. Honestly, this is a lot faster doing in bulk than doing day-by-day.  But change how you account so it isn't annoying.  I minimize my bookable transactions.  For instance I deposit all income whole (for tracking) but stop tracking when the money is converted to cash or gift card money - I log adding $50 to a McDonalds gift card, but not the individual meals.  I only use cash for the myriad small things I do not want to track - fast food, parking meters, etc.  Anything big or that I want to track goes on a credit card.  Then it's easy to reconcile credit cards to accounting system.   (Cathy) Ryan's Law: if it wasn't written down, it didn't happen. So ... how are you going to have a bank run if you got rid of cash? I suspect big investors will attempt (have already attempted?) to pull their cash, but regular people? Not like running to the ATM will do much good and I don't think they have offshore accounts.  Excuse my naïveté, but that's the first thing that came to my mind... You're saying that you're thinking of keeping 35% in cash? If you expect the market to plummet in the next few months and then head up again, this would be a smart strategy. Hold on to a bunch of cash, then when the market hits bottom buy, then as it goes back up collect your profits. In practice, the long-term trend of the market has been up for as long as there has been a stock market. Bear markets tend to be relatively short, usually just a few months or at most a year or two before the market gets back to where it was. If you are smart enough to predict when there will be a decline and how long it will last, you're smarter than 99% of the professionals, never mind the amateurs. Personally, I keep only trivial amounts of cash. Let's see, right now about 2% of my assets. If you're more active in managing your retirement accounts -- if you really watch the market on a monthly basis or more frequently and adjust your assets according -- it would make sense to keep a larger cash reserve and use it when the market goes down. But for the average person, I think it would be a big mistake to keep anywhere near 35% of your assets in cash. In the long run, you'll probably lose out on a lot of potential growth. Everyone would like a savings/checking account that has the same liquidity as others but pays multiple times as much, but such a thing would break the laws of finance.  The thing keeping savings and checking accounts cheap isn't particularly the FDIC insurance but the high liquidity and near certainty that you will not lose money.  In all of finance you are compensated for the risk (and perhaps illiquidity) you bear.  If you insist on a risk-free and highly liquid investment, you will get the risk-free and highly liquid rate, which is currently around 1%. Doesn't matter what type of investment it is (savings, money market, treasuries, etc.).  Money market funds, in particular, were designed to be a replacement for savings accounts.  They have decent liquidity and almost no risk (and no FDIC insurance).  But they earn about what good savings accounts do, because that's what risk-free investments earn. If you wish to earn more you must decide what you will give up: Decide on one (or both) of those to sacrifice and you will find yourself with options. "I'm not a fan of using cash for ""emergency"" savings. Put it in a stable investment that you can liquidate fairly quickly if you have to. I'd rather use credit cards for a while and then pay them off with investment funds if I must. Meanwhile those investments earn a lot more than the 0.1 percent savings or money market accounts will. Investment grade bond funds, for example, should get you a yield of between 4-6% right now. If you want to take a longer term view put that money into a stock index fund like QQQ or DIA. There is the risk it will go down significantly in a recession but over time the return is 10%. (Currently a lot more than that!) In any event you can liquidate securities and get the money into your bank is less than a week. If you leave it in cash it basically earns nothing while you wait for that rainy day which many never come." "While I certainly agree with the principle of paying down debt, there is some value in having a healthy cash cushion.  If an emergency expense were to come up, and your credit has been cut-off or reduced to the point where you have no excess credit, then having real cash on hand is critical. I would perform the following thought-experiment:  What if my available credit had been cut off?  How much would I need in cash to survive for 1 month, 3 months, 5 months, etc.?  Consider what time period you'd be comfortable with, and set that amount as your minimum desired cash on hand. While it may seem extreme to not have access to credit at all, during the credit crisis many banks and lenders ""tightened"" their lending: reducing credit limits, closing lines of credit, calling loans, raising rates, etc. Suze Orman recommends cash savings equivalent to 8 months living expenses. That doesn't mean 8 months salary, but 8 months of what it would take to live on.  At one point, in the midst of the economic crisis, I thought that made sense. The Simple Dollar blog considers Suze's recommendation and the idea of emergency fund vs. debt repayment.  Worth reading: Is Suze Right? Do Emergency Funds Now Trump Debt Repayment?." You can't both enforce saving and have access to the money -- from what you say, it's clear that if you can access the money you will spend it. Can you find an account that allows one withdrawal every six months but no more, which should help to cut down on the impulse buys but still let you get at your money in an emergency? Given that we live in a world rife with geopolitical risks such as Brexit and potential EU breakup, would you say it's advisable to keep some of cash savings in a foreign currency? Probably not.  Primarily because you don't know what will happen in the fallout of these sorts of political shifts.  You don't know what will happen to banking treaties between the various countries involved. If you can manage to place funds on deposit in a foreign bank/country in a currency other than your home currency and maintain the deposit insurance in that country and not spend too much exchanging your currency then there probably isn't a downside other than liquidity loss. If you're thinking I'll just wire some whatever currency to some bank in some foreign country in which you have no residency or citizenship consideration without considering deposit insurance just so you might protect some of your money from a possible future event I think you should stay away. If inflation is at 2% per annum, in a year you would need £102 to buy equivalent goods to what you could buy today.  So if you keep your money in a drawer the buying power of your £100 in a year will be only 100/102 = 98.039% of what it is currently. In today's market being paid 1% for risk and free access money is pretty darn good.  If 50k is what you feel comfortable with an emergency fund, then you are doing a fine enough job. To me that is a lot to keep in an emergency fund, however several factors play into this: We both drive older cars, so I also keep enough money around to replace one of them.   Considering all that I keep a specific amount in savings that for me earns .89%.  Some of that is kept in our checking accounts which earns nothing. You have to go through some analysis of your own situation and keep that amount where it is. If that amount is less than 50K, you have some money to play with.  Here are some options: While on a completely different scale to what you boys are talking about couple of years ago I was a relationship manager in retail banking and would on the reg have to sign away ~400k out of the tellers boxes and into the safe. After a few months of that you kind of view it as lego to fuck around with... [Australian money](https://www.google.com.au/search?q=australian+money&amp;hl=en&amp;prmd=imvns&amp;source=lnms&amp;tbm=isch&amp;sa=X&amp;ei=OquAUO2SD82ciAfSnoDgCA&amp;ved=0CAoQ_AUoAQ&amp;biw=1006&amp;bih=502)