Bob McA asks the following:
Question:
You have a simple formula: place one asset in S&P 500 Index ETF and the other asset into CASH (not bonds or other fixed income instruments). Do you have any recommendations as to where you place CASH? In the USA, there is the potential problem that should our economy tank, each bank can only provide “insurance” up to $300K per account (I think that’s right), so that forces one to open up several accounts potentially in multiple banks/savings institutions. Do you have a better formula for this?
Monday Morning Millionaire Program Answer:
Please note that the Monday Morning Millionaire Program contains opinions only. We do not provide any investment advice or endorsements.
The role of cash is to keep investors’ “powder dry” and allow buying the market at bargain prices when it drops. Cash in a money market fund earns a paltry 0.4% annual interest but is always available without a penalty.
Concerning safety on the cash, your fears are real. Let us look at the history.
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