The danger in a market crash usually isn't the crash — it's being forced to sell into it. Enough liquidity is what lets you leave your long-term money alone and wait a downturn out.
Start with the baseline: an emergency fund
The common guidance is 3–6 months of essential expenses in cash or near-cash. Note "essential" — rent, food, utilities, minimum debt payments — not your full lifestyle. Lean toward the higher end (or beyond) if:
- Your income is variable or commission-based.
- You're a single earner for your household.
- Your job or industry is volatile.
- You're close to, or in, retirement.
Why more matters near retirement
Once you're drawing from your portfolio, a downturn early in retirement is especially harmful — you're selling assets while they're cheap, and they may never fully recover for you. A cash "bucket" of 1–2 years of spending lets you pause withdrawals during a slump and sell only once prices recover. That buffer is the practical defence against sequence-of-returns risk.
The balance: too much cash costs you too
Liquidity isn't free. Cash that sits idle loses purchasing power to inflation every year, so an oversized cash pile is its own quiet drag on your wealth. The goal is right-sized, not maximised — enough to never be a forced seller, not so much that you're needlessly poor later.
Size it against your real plan
The right buffer depends on your essential spending, your income stability and where you are in life — which is exactly what a projection can show. Dispono's Insights score your cash pool and liquidity against benchmarks, and its Scenarios let you simulate a market crash or a job loss to see whether your plan survives it. You find out how big your buffer should be before you need it.
Figures and projections are illustrative estimates, not guarantees, and this guide is not financial advice. Discuss decisions with a licensed advisor.