The Cash Reserves section allows you to view, add, edit, and delete cash reserves in the account. Cash reserves can be set to specify cash needs for the client. These can be for one-time cash needs or for recurring needs, like required distributions.
When managing cash in an account, Cash Reserves can work as part of the total Account Reserves. For more about managing cash with Account Reserves, see Cash Management Strategies.
Cash Reserves Settings
When you select Add, the following options become available. These define how you want the cash reserve to behave in the account:
| Setting | More Information |
|---|---|
| Amount |
Designate the amount you want set aside for the reserve. Select one of the following to designate the amount:
|
| Category |
Type the classification for this cash reserve. You can choose any category you want and categories you've used before will automatically populate in the Category list. Examples may include management fee, quarterly taxes, RMD, DCA, etc. |
| Notes |
Add an optional note to add information to the cash reserve. For example, you can specify an RMD date or information about a fee change. |
| Cash Reserve lower threshold |
Add an optional lower threshold amount for the cash reserve. This determines how far actual cash can fall below the target cash reserve before Tamarac Trading triggers sell recommendations to raise cash.
The formula below shows the calculation to find the minimum cash amount Tamarac Trading will permit before recommending trades. Cash reserve amount (target) – Reserve lower threshold
For example, an account has $25,000 in total beginning cash, a $35,000 cash reserve, and a lower tolerance of 25% of the reserve, or $8,750. If you take the difference between the cash reserve ($35,000) and the lower threshold ($8,750), you will end up with $26,250. This is the minimum cash amount needed before recommending trades. Since the starting cash of $25,000 is less than $26,250, Tamarac Trading will seek to raise the remaining $10,000 so the cash meets the cash reserve ($35,000). |
| Cash Reserve upper threshold |
Add an optional upper threshold amount for the cash reserve. This determines how far actual cash can rise above the target cash reserve before Tamarac Trading triggers buy recommendations to invest the surplus. The formula below shows the calculation to find the maximum cash amount Tamarac Trading will permit before recommending trades. Cash reserve amount (target) + Reserve upper threshold It's best practice to make your upper threshold 0. This allows all investable cash to be traded and prevents excess cash in the account rather than in the market. |
| Effective Dates |
Enter the Start Date and the "effective to" or End Date for the cash reserve.
|
| No end date |
Set this option when the cash reserve will always apply. |
| Add recurrence |
Select Add recurrence if you want to create a recurring cash reserve. For the steps to do this, see Add Recurrence. To keep the recurrence going forever, select No end date. |
The total of all cash reserves in the account is shown as Total Cash Reserve. Any notes added to further describe or add details about the cash reserve will show under the cash reserve.
For more information on the processes you'll use to create, edit, and delete cash reserves in the Cash Reserves section, see Cash Reserves.