Portfolio Cash

Portfolio Cash: Not Just for Investing

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Portfolio cash accounts are typically kept for reinvesting opportunities or other events such as Required Minimum Distributions (RMDs). Investors and their advisors often want to move cash to securities for performance in an environment where interest rates are low or effectively at 0%.

There are reasons that cash accounts should always be present in an investor’s portfolio:

  • Liquidity and opportunity
  • Reduce portfolio volatility
  • Preparing for a slowing Bull market

Although it is tempting to invest cash into the market to produce a better return, there are other reasons to keep cash idle inside a portfolio:

An Unexpected Emergency

Many Americans were economically impacted by COVID-19 and maybe in 2021 again. Having cash available for an unexpected life event is one of the easiest ways to keep a portfolio intact and an investor safe.

A portfolio doesn’t always come to mind as an emergency fund, but having cash reserves for financial hardships is a good idea. Investors that choose to keep their portfolio cash account as an option for emergency funds should rely on their bank savings account first and liquidate their portfolio cash account last.

For financial wellness. Financial wellness means different things to different people, and having cash available means that the investor can make their dreams happen, leading to their happiness. This available cash could be for a new home, paying for secondary education or a wedding, or giving to others. When an investor has access to money, they can make someone’s life better- or their own. Life-changing events that are happy and celebrated is what cash accounts can help fund.

Investment Strategy Protection

Cash accounts are tied to an investor’s psyche and can help them stick to their investment strategy through all types of market events. When an investor sees their cash account maintain its value during a down market, they can feel at ease to wait out the market’s correction.

Meet With Your Financial Professional

If you have questions about maintaining portfolio cash or want to review your investment strategy, now is a great time to review your financial plan. Contact our office to schedule your review.

© 2024 Trajan® Wealth LLC. Nothing in this blog is intended as investment advice, nor is it an offer to buy or sell any security. Please consult your financial advisor for questions about your personal financial situation. All investments involve risk, including the potential for loss. Trajan Wealth clients and employees may have a position in any of the securities mentioned. Portfolio holdings and other data are subject to change at any time and without notice. Additionally, the above links provided as a convenience and for informational purposes only; they do not constitute an endorsement or an approval by Trajan Wealth, L.L.C., of any of the products, services or opinions of the corporation or organization or individual. Trajan Wealth, L.L.C., bears no responsibility for the accuracy, legality or content of the external site or for that of subsequent links. These materials are for informational and educational purposes and are not designed, nor intended, to apply to any person’s individual circumstances. It does not take into account the specific investment objectives, tax and financial condition, or particular needs of any specific person. Please consult with your legal and/or tax advisor before making any tax-related decisions.