mkytz15

cirkon wrote:
brafique wrote:
So basically, the difference is that the emergency fund, which would be ($50,000/2) since he keeps six-months on hand, is omitted in the second one. Shouldn’t this be part of the return calculation? Or, alternatively, shouldn’t it be subtracted from the $5,000,000 before any calculations are done as it is not an investable amount?
Isn’t this 6-month reserve just a liquidity requirement (not impacting the required return, but rather impacting acceptable asset allocation?).
That’s what I’d say. $25k should be kept in cash, but it doesn’t need to be $25k in addition to the $5,000,000. He ought to at least be earning interest on that $25k.