I have half a dozen "buckets" of short-term cash sitting in money markets; e.g., vacation fund, unforeseeable house repairs, a post-COVID wedding reception, etc.
Looked at individually, none of them seem safe to invest, since I'll need between 15% and 30% of it in the next 3-18 months. As a whole, though, they represent a non-trivial amount of money, and are unlikely to all be needed at the same time. Many of those buckets are perennial too (e.g., vacation & home repair funds); I always deposit some into them every month, and then withdraw a few times a year.
What's a good way to weight the risks and potential benefits of investing them, instead of letting them sit in a money market? If I wanted to withdraw it during a market downturn, I'd likely have options available where I would wait until the market improved to sell a lot (postpone discretionary expenses, cut back on spending, pay expenses in smaller monthly installments, cut back on donations if I really had to, etc). And of course, I'll always keep my emergency fund in a low-penalty CD.
If I take this approach for the next 30-50 years, it seems safe to me. Even if there are times where I can't wait and have to withdraw at a loss, it seems likely that those losses would be covered by the fact that the rest of the time it's earning ~7% instead of ~1%.
I'm not sure how to confirm my hunch with hard numbers, though. And I'd also like to get opinions from other folks.