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.

I've read a few similar questions, but this one seems different because of the recurring and aggregated nature.

  • 1
    So you need a forecasting system that lets you specify a lump sum, income, expenditure, dated goals, then run some asset allocations and look at the probabilistic range of outcomes? Your local friendly (...) financial adviser will most likely have access to such; I don't know of any free ones.
    – AakashM
    Mar 18, 2021 at 15:05
  • Lump it all into one savings account, and then use a spreadsheet to divvy it up: one column per "purpose". Using that, forecast contributions and needs/withdrawals. From there, decide how much you can afford to invest in a safe higher yield investment like a municipal bond fund (which has "interest rate risk") or US I-Bonds.
    – RonJohn
    Aug 15, 2021 at 0:13

1 Answer 1


General investing isn’t complicated, no matter how much it may seem to be. There’s almost never special cases where you need other funds, bonds or stocks than other people because your situation is unique, because with 99% certainty it’s anything but.

Invest the money you can tolerate a loss for in something like an index fund with low fees and expect around or at best a 7% yearly return only after ten consecutive years.

If you’re likely to need the money before that, and/or you cannot tolerate a loss during that time, the money probably shouldn’t be invested but saved for whatever expenses you’re expecting to need them for.

  • Hi pzkpfw, I don't think my situation is unique, but I do think it's possible that the typical advice is simplified & generalized for a broad audience, and that there may be opportunities for optimization in some common situations. I'm happy to be convinced otherwise if there's a compelling reason, though. If I were to invest, it would definitely be in a low-fee passive index like you suggest. I can tolerate some loses over the short term in return for larger gains in the long term. I'm looking for a method/formula that will let me "run the numbers" in different scenarios.
    – Ian Dunn
    Mar 15, 2021 at 20:49

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