Some months back had this conversation with friends over coffee about the concept of stashing cash aside each month. It gels well with the earlier discussion of monthly investment plans. The idea of keeping cash aside other than for the purpose of dollar cost averaging to buy into stocks is to buy in when the market dips.
What amount to set aside?
I would consider putting aside 5-10% of disposable income each month into the war chest or whichever amount is comfortable.
When to enter the market with heaps of stash away funds?
You could consider a few equities counter which you will like to buy into and set up price alerts – some brokerage apps have that function. So when the alert flashes, you will know when to enter the market. Or alternatively, will be to monitor it daily, look at the 52-week range to determine when is the entry point.
When to consider monthly investing instead of stashing funds?
There will be times when you have the cash but the market is too high in price for comfort to enter. An alternative will be to just consider monthly investment plans or keep waiting for the comfortable moment to enter.
The stock market is somewhat like a supply and demand concept with speculative elements within it. People win and lose at the same time: when you buy low sell high – gain, when you buy high sell low – lose. These are just some observations and ideas; not stock advisory. Always proceed with caution or some risk if you are a risk-taker to experiment.