The basic question is how much of my 'money' should I have on hand (ready to spend immediately) as opposed to putting it all in a high-yield (or at least inflation-fighting) investment?
For instance, I currently budget 500 in 'cash' (in my bank's checking account) and the rest of my 'un-budgeted income goes into Scottrade and I personally manage my 'short-term/intermediate term' savings that way via stocks. I sleep well knowing that I do have a credit card buffer (1.5k) and of course xx,xxx dollars in stock positions that are no more than 3 business days away should I need them.
My bills are pretty cheap as I live a minimalistic lifestyle and I get paid bi-weekly. On payday, I set aside 500 for the two weeks (groceries/hobbies/etc) and if any reoccouring bills are due before next payday I pay them. Then, I toss the rest into Scottrade.
My problem is that I hate 'wasting' the opportunity cost! I know you should never "risk more than you can afford to loose" but at this point in my life the money I personally invest is not super 'necessary for my life' (I already have a decent employer paid retirement account and manage a ROTH IRA).
If I do what some people say and keep 3, 6, or a year's worth of bills on hand that's a significant chunk of change being lost every day in missed interest...
Of course the worst case scenario would be that I lose all my positions' value and my job and perhaps lose my arms (I'm a software engineer) and perhaps even am stuck with a huge bill somehow, but what are the odds that that (or any of that) will happen. [admittedly more than I'd like to think but you get my point]
So, what is a good amount/percentage of cash to have on hand (after bills are paid/accounted for)?
Am I just being naive (I'm in my early 20s) or what?
update I am flexible with the 'cash on hand' amount. For instance, for about three months I put a very tight spending/investing freeze on my life because I knew I'd be leaving jobs and moving (I already had the other job lined up). Once I moved and settled in, I eased up and am back to my 'pre-life-changing-event' budget mode.
Is my overall model fine? How much of a risk am I taking? I'm no stranger to risk, but tend to know my enemy (and keep her close;)