What to enter under cash reserve
You should enter a value in the Cash reserve goal, if you want to keep aside an amount of cash for unforeseen emergencies. In the modelling, Pathfinder will keep the cash reserve at the required level and will not use these funds.
The cash reserve will be kept in any of the following accounts (whichever has the best return under the given assumptions):
Directly help cash accounts (i.e. not in an SMSF or Trust)
Mortgage offset accounts
NOTE: The cash reserve will not be kept in the Fixed Term accounts or Insurance bonds, as these are not readily accessible in emergencies. It will also not include any cash kept in SMSFs or Trusts)
Year-by-year, Pathfinder may re-balance which account(s) the cash reserve is kept in. For example, the reserve may initially be kept in cash and then moved to an offset account when a home is bought.
Do not enter as a cash reserve:
Do not use the cash reserve to save up for an expense. You do not need to tell Pathfinder to save up for an expense, simply enter the expense and Pathfinder will set aside funds to pay for it (for more information, see the Expenses help page).
How to enter a cash reserve
Go to the Cash flows and Goals step (top menu), and the click the Cash reserve sub-step.
Fill in the 'Cash reserve' field. You can use the series builder to increase or decrease the cash reserve year-by-year (for more, see How to use the series builder)
If you want to run multiple scenarios for comparison, it's generally a good idea to keep the same cash reserve in all scenarios (unless there is a good reason to change it). This is because cash typically has a lower return than other investment options, so Pathfinder will usually favour other investments over cash. So, if one scenario has no cash reserve and another scenario has a specified reserve, it is possible for the former scenario to have a better return because Pathfinder has been allowed to invest more funds in an investment with a higher return.
Keep a cash reserve for emergencies
Increase or decrease a cash reserve
To increase or decrease the cash reserve values, see How to increase or decrease a value in the series builder.
Some examples of circumstances where you might like to change the cash reserve level include:
Use the cash reserve to solve a shortfall
You may wish to temporarily reduce the cash reserve to help with a one-off cash shortfall:
Results for the cash reserve
See Cash Reserve results .