Saving, Managing Debt, and Budgeting


Why else should I have a portion of my portfolio in cash?

Many experts believe that holding a certain percentage of your portfolio in cash has many benefits for investors. Although it is important always to have a certain amount of cash on hand for emergencies or unplanned expenses, you should also have cash on hand to acquire investments when the opportunity arrives, so you do not have to sell other successful, longer-term positions—and pay the capital gains taxes—in order to purchase more investments. You can simply use cash. Other experts believe in holding a certain percentage of your portfolio in cash as a way to preserve your capital in a down market. Cash also increases value over time during periods of deflation. When purchasing a house or other real estate investment property, using cash to increase your down payment may enable you to obtain better terms on your loan and to make a more attractive offer for the property.


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