Keep a capped cash reserve before reinvesting the surplus.
For assumed receipts of $300, $100 and $0, a $100 reserve cap funds $350 of three $150 cash targets and leaves a $100 gap. The same rule with a zero cap funds $250; a $150 cap funds $400. These are chosen scenarios with zero opening reserve, not recommendations for a reserve size or actual SCHD payments.
The fixed-cash-budget worksheet reinvests every receipt surplus immediately. This extension explicitly retains some surplus for a later event. It tracks what can be spent, what remains in reserve and what has already been assigned to reinvestment, without pretending that all three balances are still available as cash.
Apply the rule in a fixed order
At each event, available cash = opening reserve + current receipt. Supply the smaller of available cash and the target. From what remains, retain up to the reserve cap and assign the rest to reinvestment. Funding gap = target − cash supplied. There is no borrowing, share sale, investment return, reserve interest, tax or fee in the replay.
With the $100 cap, event one has $300 available. Supply $150, keep $100 in reserve and allocate $50 to reinvestment. Event two begins with that $100 reserve and receives another $100, making $200 available. Supply $150 and carry the remaining $50 as reserve; nothing is reinvested at that event.
The third event receives $0 but starts with $50 in reserve. It supplies $50 of the $150 target and records a $100 gap. The ending reserve is zero. Across the sequence, $350 was supplied and $50 was reinvested: $350 + $50 + $0 closing reserve = $400 of receipts. Requested cash was $450, so $350 supplied + $100 unmet = $450.
Changing the cap changes the destination, not the receipts
At a zero cap, the first event's entire $150 surplus is reinvested. It cannot pay a later target without an additional sale rule. The second event supplies $100 and the third supplies nothing, leaving gaps of $50 and $150. Total supplied cash is $250 and the funding gap is $200.
At a $150 cap, the first surplus stays in cash. Event two has $250 available, supplies $150 and leaves $100 reserved. Event three then supplies $100 and leaves a $50 gap. All $400 of receipts is used for the targets and nothing is reinvested. Raising the cap did not create extra income: it redirected money that the zero-cap scenario had already invested.
The $100 cap sits between those endpoints. Relative to cap zero, it reinvests $100 less and supplies $100 more. Relative to cap $150, it reinvests $50 more and supplies $50 less. Each comparison balances exactly because the opening reserve, receipt sequence and targets were held constant.
| Reserve cap | Total cash supplied | Reinvested | Closing reserve | Unfunded |
|---|---|---|---|---|
| 0 | 250 | 150 | 0 | 200 |
| 100 | 350 | 50 | 0 | 100 |
| 150 | 400 | 0 | 0 | 50 |
Trace the reserve, one event at a time
The event ledger shows opening reserve separately from the new receipt. The available-cash column is their sum, not additional income. Do not add it again when reconciling the sequence.
| Cap | Event | Opening reserve | Receipt | Available | Supplied | Reinvest | Closing reserve | Gap |
|---|---|---|---|---|---|---|---|---|
| 0 | 1 | 0 | 300 | 300 | 150 | 150 | 0 | 0 |
| 0 | 2 | 0 | 100 | 100 | 100 | 0 | 0 | 50 |
| 0 | 3 | 0 | 0 | 0 | 0 | 0 | 0 | 150 |
| 100 | 1 | 0 | 300 | 300 | 150 | 50 | 100 | 0 |
| 100 | 2 | 100 | 100 | 200 | 150 | 0 | 50 | 0 |
| 100 | 3 | 50 | 0 | 50 | 50 | 0 | 0 | 100 |
| 150 | 1 | 0 | 300 | 300 | 150 | 0 | 150 | 0 |
| 150 | 2 | 150 | 100 | 250 | 150 | 0 | 100 | 0 |
| 150 | 3 | 100 | 0 | 100 | 100 | 0 | 0 | 50 |
Download all three event paths · Download boundary inputs and expected outputs
Boundary tests expose hidden assumptions
With no receipts and no opening reserve, two $150 targets are entirely unfunded. With a $100 opening reserve, a single zero-receipt event can instead supply $100 and leave a $50 gap. Existing cash is therefore a separate input; the example cannot silently assume it when a dividend is too small.
A zero budget with a $300 receipt and a $100 cap supplies no spending cash, retains $100 and reinvests $200. An exactly matching $150 receipt and target leaves both reserve and reinvestment at zero. With no events, an initial $100 reserve remains $100 and no target is charged.
The test file rejects a missing cap, a missing receipt, a negative cap and an opening reserve above the cap. The last restriction is this worksheet's initial-state contract, not a bank rule. A version that begins above its cap must specify how to treat that excess before comparing results. Missing inputs produce blank numeric outputs with an explicit status, never an invented zero balance.
Can this establish a safe SCHD cash buffer?
No. The three receipts have no observed dates and the targets are hypothetical. The cap is a tested control, not an emergency-fund recommendation. Real payment timing, variable expenses, taxes and investment losses are outside this example. For a separate historical dated replay, use the monthly cash-flow worksheet.
Source and audit boundary
A public question about using distributions for bills versus retaining a buffer supplies the reader question, not the dollar inputs or account rules. Investor.gov distinguishes contributed or withdrawn money from estimated growth in its calculator. Here the capped-reserve algorithm and event fixtures are independent arithmetic. The three sampled competing calculator pages already cover cash and DRIP; the specific conservation checks and reserve-cap paths are the bounded addition, not a claim of universal novelty.