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#1
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I'm new to this topic, so maybe somone asked this already...
Anyway, why do people recommend to have like 5% cash in your mutual fund portfolio? I'm looking at this one particular model, and it says 75% US stocks, 20% international, and 5% cash, as an optimal aggressive plan. Thanks Soh |
#2
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You might hold interest earning cash, to reduce volatility.
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#3
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It may also be for emergency needs. Say you lose your job, you don't want to be forced to sell stocks or bonds (possibly when they are at their lows) to pay your rent.
Similarly if you are in retirement and will be taking regular cash distributions from your portfolio for living expenses. You would keep some cash ready, so you aren't forced to sell at the wrong time. |
#4
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you can't use a debit card or stock to buy drugs and prostitutes.
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#5
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When the 2 big hurricanes tore through the gulf coast, a majority of credit card machines, ATM's and banks went offline. No matter where in life, cash will always be accepted.
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#6
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[ QUOTE ]
When the 2 big hurricanes tore through the gulf coast, a majority of credit card machines, ATM's and banks went offline. No matter where in life, cash will always be accepted. [/ QUOTE ] That's not correct. When governments fall, cash becomes worthless. Then it's good to have some of these: http://en.wikipedia.org/wiki/Krugerrand |
#7
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In mutual funds, I heard that its good to have extra cash for the managers to use at their discretion, so they don't always have to sell one stock to buy another.
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#8
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My cash inside of my portfolio is earning some interest, but I'm sure there's better safe investment that earns more interest, like some bonds.
Soh |
#9
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I was talking about the cash within MY portfolio, not within some mutual funds.
Soh |
#10
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The thing is, it'll take some time to take the cash in my portfolio out anyway.
Plus, I'm not planning to use this cash for some emergency. For some emergency cash, safe is a better place, IMO. Soh |
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