I kept my cash bar pretty high over the last 3 or 4 months, but maybe you have been more daring. As we head into record territory yet again, maybe it is a good time to look at your cash position and decide whether to beef it up.
Cash in this case is uninvested cash in your brokerage account(s). Not in bonds, not in gold, cash. Because cash is what you want if the market takes a severe drop. It gives you an opportunity to buy in at a lower price.
Why go more to cash now? Markets are headed yet again to record highs and they will only go up for so long before they come crashing down. Now nobody knows when this will happen or how bad it will be, but rest assured that as the market goes up, so too it will come down.
If you move to 30% cash, you will still have 70% invested, so that if the market keeps going up, you will continue to make money. You may not make quite as much but if you’re anything like me, you have made quite a bit already. Enjoy it. Be a little defensive.
This is the only times I will tell you to pay attention to the market – at highs and at lows. When at highs, it is time to be defensive. At lows, it is time to find bargains to buy.
Now I am not being chicken little saying the sky is falling. If I knew that it was, which I don’t, I would tell you to go all to cash. Nobody knows for sure what the market will do but if it’s high, it will probably drop at some point; and if it’s low, it will probably be higher at some point.
- The risks of fleeing to cash in times of crisis – Russell Investing
- How Much Cash Should You Have In Your Portfolio – UFB Direct
- How Much Cash Should I Have in My Portfolio During Volatile Markets? – Personal Capital
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