I never understood "I need cash for an emergency".
It's been already over 30 years since I needed lots of cash. Just in the last 1.5 years, we had the following unpredictable expenses:
1) My wife totaled a vehicle and we bought a new one. I took a small loan and paid it in full in 2 weeks because the dealer gave me a $500 discount. He also agreed to charge my Visa 2% cash back for another $10K. I still owed close to $10K which we paid by check because the dealer was willing to wait 4-5 days.
2) First time in my life we just went to see the possibility of replacing the other old vehicle one Saturday, and found a great cheaper option than expected and just bought it. That dealer only allowed me $3K on my Visa 2% cash, the rest was expected in 2 business days. I sold a fund at my broker account on Monday and wired the money on Tuesday.
3) The roof started leaking heavily. First, we covered the hole with a blue tarp. Then, we found a roofer I liked. For the initial pay of just $2K, I used the same Visa again. He charged me 3% (lost 1%) but I did it so I can dispute something in the future while you can't do it with checks. The work was amazing and I paid with a check.
4) The deck suddenly was wobbly and could not be used. Same process as above.
All were "must do/fix it quickly".
We just keep several thousand in the bank and the rest is invested in brokerage accounts in the market. Most retirees have safer, short-duration bonds they can always sell. In the last year, MM pay over 5%, again not a problem, but MM will not do that for a long time. I don't invest in anything I think can't generate 6+% annually.
BTW, while I was working I was laid off 4 times, when I needed more money, I just sold 1-2 of my mutual fund. Again no need to hold months of available cash.
All our credit cards and loans over the years were paid in full every month and why we have a very good credit score.
I'm still looking for a logical reason why I need an emergency fund and can't find one...wait, I got 2 needs = illegal drugs or ransom.

I've been contemplating down markets as we make new highs in some areas of the market.
I have been reviewing my portfolio for what has not participated to the recent upside and I trying to understand why. Like being picked last in kickball, some of my holdings have been left on the sidelines. I need to consider the value these laggard investments provide my portfolio. Most importantly, as an retired investor in the de-accumulating phase of life, I contemplate how best to manage my portfolio withdrawals as I dollar cost average out of positions in up and down markets.
Long term treasuries have historically appreciated during periods of equity down turns. This was not the case most recently as we witnessed both equities and bond move down in unison.
Have we returned to more normal times where bond (especially LT bonds) will balance out our portfolio performance by acting as the opposite weight (barbell) to our equities?
Time to review some of the all weather portfolio links I have bookmarked somewhere.
I'll start be re-posting @hanks June 2023 discussion submission:
debate-over-60-40-allocation-continues/p1

According to CrossingBridge's definition of the term RSIIX held 4.5% of its portfolio in "cash" at the end of the year.

The Week in Charts (01/21/24)
The most important charts and themes in markets, including...
00:00 Intro
00:24 Is the War Against Inflation Over?
03:30 Signs of Cooling Inflation All Around
05:16 Early Read on January CPI
09:59 Is the Fed About to Make a Policy Mistake?
17:26 Housing Market Deep Freeze Continues
23:43 Retail Sales Resurgence
26:08 Capitalism vs. Communism
38:02 The Bitcoin ETF and How Market History Rhymes
41:16 Increasing Prosperity: Wages Outpacing Inflation
Video
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@Derf - Not a bad idea, except mortgage interest rates have rocketed up over past couple years. I actually have a small 3% refi mortgage taken out 5-6 years ago for some remodeling. Hell can freeze over before I’d pay it off. Today you’re probably looking at around 7-8% 6% on any kind of mortgage refinance.* Not an attractive risk / reward proposition IMHO.
* One source I checked shows 15 year fixed refi loans (national average) currently at around 6%.
Umm … maybe. Proceed at own risk! :)

So the cash bucket certainly needs to be adequate to cover 3 to 5 years of those normal expenses.

@Old_Joe - Nice detailed job outlining conventional wisdom. But ISTM that’s exactly the notion the author is arguing against. If I’m reading him right, he thinks the risk of losing out on potential market gains while sitting on that bucket of cash is greater than the risk of having to pull that money out on a “as needed” basis when markets are lower. (That’s because markets usually go up)
It should be noted,
(1) the article is from 2020 when cash yielded 1-2%, much lower than today’s near 5%.
(2) His recommended “investment” portfolio is quite conservative with up to 50% sitting in intermediate-term Treasuries / TIPS.
Enjoying all the thoughts folks!

One thing I noticed. When I retired I planned for about 55k/yr expenses. Now retired 17 years I found I'm averaging 73k+/yr. Some of that is inflation but what adds up is the new cars, new roof, new boat, some large xmas gifts to the kids. i.e. those big expense items spread out over the years add several $k per year to your budget. ADD: I guess some of that additional spending is because I feel comfortable with my results so far.

While the Treasury yield-curve is weird. It has an unusual dip in the belly. It seems that an inverted yield-curve is trying to normalize (to up-sloping), but the Fed has literally fixed the short end.
https://www.ustreasuryyieldcurve.com/

This doesn't exactly align with the belly, but I found it interesting that most yields are still significantly above where they were at the start of 2023 except for 1 - 7 year maturities where they are the same as 2023 (at the low end of that range) to 1/4% higher at 7 years.
In other parts of the curve, the current yields are around 1% higher now at the short end (1.5% higher at 1 mo.) than Jan 2023 and around 1/2% higher at the long end. If one squints just right, that seems to follow the same contour as the yield curve itself.
This might just be another way of saying that the yield curve is flattening, or as you put it, on its way to transitioning from an inverted curve to a normal curve.
ov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value=2024

FWIW to the naysayers of CDs, my CD ladder has outperformed gem fund RPHIX for the past 3, 5 and 10 years with no market risk and guaranteed, FDIC'd interest payments.

Catch22, I believe you’re half right regarding FZDXX (FZEXX-muni sister). Yes, you have to purchase like a MF but you do not have to sell to buy. I’ve been using one or both of these MM funds for several years. And never did I have to sell to buy anything. It first checks your core account for sufficient funds, then pulls from FZDXX / FZEXX if necessary.

Yep, and that's a nice advantage over VG NOT searching for and pulling money from any
other MMkt a/c's other than your Settlement a/c, making VGBUYs a 2-step process at times.
On FZDXX Minimums: We have owned FZDXX in EVERY taxable and IRA a/c that we either own or manage for friends and relatives for as long as we can remember. NEVER has Fidelity held us to the stated minimum for FZDXX in the respective a/c's. In some a/c's we have as little as $25 in FZDXX, and have had that piddly amount for over a year!
Note that some of those a/c's are for persons NOT regarded by Fido as Preferred Customers.
VG conversely does routine sweeps related to MMkt and Admiral shares Mins, and adjusts your holdings accordingly.

You may have an interest in current Treasury yields across various issue durations. The most current yield is available to the far right of any line. Hover a pointer there to display the yield, which is auto refreshed at the end of a business day. The time frame is set for one month (21 days) and moves forward in dates (an active graphic). If one chooses to view a different time frame, right click the '21 days' to select from a drop down menu. The graphic is 'yields', and not for performance or pricing.

UST's, 30 year - 1 month.....a 'yield graphic.
Remain curious,
Catch

The author disagrees with the often recommended notion of stashing away 3, 5 or 10 years spending in cash or short term treasuries to ride out potential market downturns. It’s a popular notion often recommended here and across the financial press.
His investment portfolio: ”Beyond cash, all a retiree needs is one ‘bucket’ for investments. The portfolio would hold between 50 and 75% in equities for those following the 4% rule or similar retirement spending strategies. The remaining 25 to 50% would be held in intermediate term Treasuries and TIPS.”
I’m pretty much in agreement with @Crash. I generally don’t bother to maintain a bucket at all, but sell / withdraw from investments “across the board” two or three times during the year for basic needs or major expenses. If the markets get a little “crazy” on the upside, I may pull out an entire year’s spending ahead of time to lock in that extra return. During withdrawals I also rebalance, taking a higher percentage from those assets that have appreciated the most. (I am aware that some here refute the notion of rebalancing at all. )
But your position is probably different. My pension (with some limited cola) and SS (inflation adjusted) could probably cover basic necessities (but not infrastructure maintenance, travel, new vehicles). So I can’t put myself in the position of those who live entirely off investments. It’s a huge difference and so “buckets galore” might well be the preferred route for them.
FWIW - I only started keeping accurate year-by-year records in 2007 (but have some generalized averages from before). Beginning with 2007 (the past 17 years) I’ve had three “down” years. Two resulted in single-digit losses. But ‘08 was nasty with a loss of over 20%. That suggests to me, anyway, that a large cash stash isn’t warranted. To wit - this simplistic analysis overlooks both the magnitude and the duration the market downturn that began in 1929. A multi-year downdraft in equities of that magnitude would inflict greater pain. (But there’d be other more serious issues to worry about.) Recent downturns have been much shorter and may have given some of us a false sense of security. Also, the Japanese experience in the 90s and afterwards should sober any who look at it.

Well... If I required of myself (and spouse) that we set aside and grow a segregated bucket full of money sufficient to cover 3 to 5 years' of expenses, I'd never be able to invest, period. So that whole bucket-stuff matters not to me, one iota. The best plan for us is to invest, prudently, for the long haul. We certainly are better off than if we were struggling to fill a pail carrying 5 years' worth of money to cover what we need for that time-period.
Each of us is dealt whatever hand we are dealt. From there, we make choices, and make the best of things. I'm feeling rather fortunate these days--- with zero buckets in the mix. Yes, this stuff in general is indeed very personal, after all is said and done. Using buckets in my case would be like attempting to make a Scientist out of me. I'm not cut out for it.

We're in danger of getting into a semantic swamp here with respect to the cash bucket. What exactly is a "normal" expense vs an "unexpected" expense?
To me, a "normal" expense is something that is predictable: a new roof, other major homeowner maintenance, typical major vehicle maintenance, and obviously the normal household operating expenses, including taxes, insurance, food, etc.
So the cash bucket certainly needs to be adequate to cover 3 to 5 years of those normal expenses. We knew well what those normal expenses were because at an early accumulation stage we kept good records of our ongoing expenses, sorted by category, so that we could separate the necessary from the optional. Optional? Things like vacations, restaurants, wine and liquor. Keep records like that and after 3 or 4 years you pretty well know what's necessary and what's optional.
An "unexpected" expense could certainly be a major medical liability or other tragedy not covered by insurance. Since something like that is unanticipated and unpredictable, frankly I don't really know how to protect against that in advance. Worst scenario it might be necessary to partially draw down both buckets for something like that.
All of this depends of course on what the normal expected income is. If the income is greater than the normal expenses, then there is, to an extent, a cushion there in case of disaster.

Still keeping an eye on ASC Ardmore Shipping out of Bermuda. RSI is high. Better to wait. Hoping to find it under $15 sometime soon.
The Red Sea attacks make things difficult. On the other hand, the situation offers maritime shippers the perfect excuse to raise prices. I wonder which way all of this will shake out? And is ASC thriving amid the situation because they do not sail through the Suez? I can find no recent press releases or announcements.
https://www.morningstar.com/stocks/xnys/asc/quote
One month old:
https://seekingalpha.com/article/4658588-ardmore-shipping-quality-company-discount-to-play-shipping-cycle

The 3 bucket strategy increases complexity and requires too much maintenance.
The author's recommended approach seems prudent:
"Beyond cash, all a retiree needs is one 'bucket' for investments.
The portfolio would hold between 50 and 75% in equities for those
following the 4% rule or similar retirement spending strategies.
The remaining 25 to 50% would be held in intermediate term Treasuries and TIPS."

Harold EVENSKY, the originator of the bucket system, had just 2 buckets - one for short-term money that didn't belong in the market, and another that was in the market for long-term. It just formalized the idea that the money one needed soon didn't belong in the market.
But his followers, especially Christine BENZ at M*, "refined" it into 3 or more buckets. Then elaborate systems followed to fill them up.
So, this 2010 interview of Evensky by Benz is interesting.
https://www.morningstar.com/articles/330323/the-bucket-approach-for-retirement-income
Edit/Add. Also found a related MFO thread from 2021, https://mutualfundobserver.com/discuss/discussion/58461/cash-flow-strategy

That's a good article and video @hank. He seems to be a proponent of 5 years cash and then a portfolio of 50%-60% equity. Well, that seems to me to be a 2 bucket system. Maybe it's just semantics. But his ideas are in line with mine, a cash buffer bucket and then a moderate portfolio bucket. I don't think you need anything fancier unless you are more comfortable separating bonds/income from your equity bucket. Everyone's brain categorizes differently.

@sma3- Well, a main issue here is very similar to what's happening in Ukraine. Cheap and dirty attack hardware costs $4.95 (on sale from North Korea and Iran) and the sophisticated intercept weaponry from the US and Israel works pretty well, but costs $4.95 million dollars per each.
Exaggeration obviously, for sake of contrast, but you can see the problem. Our tax dollars at work.