Two Plus Two Older Archives  

Go Back   Two Plus Two Older Archives > Other Topics > The Stock Market

Reply
 
Thread Tools Display Modes
  #1  
Old 12-03-2005, 06:02 AM
Soh Soh is offline
Member
 
Join Date: Oct 2002
Posts: 48
Default Why do we need cash?

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
Reply With Quote
  #2  
Old 12-03-2005, 10:41 AM
Sniper Sniper is offline
Senior Member
 
Join Date: Jun 2005
Posts: 704
Default Re: Why do we need cash?

You might hold interest earning cash, to reduce volatility.
Reply With Quote
  #3  
Old 12-03-2005, 12:27 PM
DesertCat DesertCat is offline
Senior Member
 
Join Date: Aug 2004
Location: Scottsdale, Arizona
Posts: 224
Default Re: Why do we need cash?

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.
Reply With Quote
  #4  
Old 12-06-2005, 02:58 AM
NobodysFreak NobodysFreak is offline
Senior Member
 
Join Date: Sep 2004
Location: donk betting the turn
Posts: 127
Default Re: Why do we need cash?

you can't use a debit card or stock to buy drugs and prostitutes.
Reply With Quote
  #5  
Old 12-06-2005, 10:28 AM
wonderwes wonderwes is offline
Junior Member
 
Join Date: May 2003
Location: Austin, Tx
Posts: 14
Default Re: Why do we need cash?

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.
Reply With Quote
  #6  
Old 12-06-2005, 11:43 PM
r3vbr r3vbr is offline
Member
 
Join Date: Sep 2004
Posts: 75
Default Re: Why do we need cash?

[ 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
Reply With Quote
  #7  
Old 12-07-2005, 01:32 AM
Guest
 
Posts: n/a
Default Re: Why do we need cash?

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.
Reply With Quote
  #8  
Old 12-08-2005, 09:32 AM
Soh Soh is offline
Member
 
Join Date: Oct 2002
Posts: 48
Default Re: Why do we need cash?

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
Reply With Quote
  #9  
Old 12-08-2005, 09:33 AM
Soh Soh is offline
Member
 
Join Date: Oct 2002
Posts: 48
Default Re: Why do we need cash?

I was talking about the cash within MY portfolio, not within some mutual funds.

Soh
Reply With Quote
  #10  
Old 12-08-2005, 09:36 AM
Soh Soh is offline
Member
 
Join Date: Oct 2002
Posts: 48
Default Re: Why do we need cash?

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
Reply With Quote
Reply

Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off

Forum Jump


All times are GMT -4. The time now is 01:40 PM.


Powered by vBulletin® Version 3.8.11
Copyright ©2000 - 2024, vBulletin Solutions Inc.