What To Do With Cash

On March 9, from A/Professor Ansgar Cheng, Singapore

Question:

Both my wife and I finished reading Monday Morning Millionaire Ed.2. Great book!

You said you practice holding about 50% cash and basically wait for the opportunity to deploy. That, we think is a great idea. One big question; what do you do with the cash while it is in between deployment?

Thanks in advance.

Monday Morning Millionaire Program Answer:

Thank you for your kind comment about Monday Morning Millionaire Ed.2.

Investors who rebalance their portfolio to maintain a 50% market index ETF/50% cash mix reduce their risk considerably during stock-market drops without giving up much in return in the long run (a period of 10 years and more).

Follow this link to read an excellent article describing a variation on this subject. The article refers to holding 50% bonds. As interest rates rise from their historic lows, bond values will drop. That is why cash is safer today.

Recently, one of our members asked a question similar to yours. Read the answer here.

Bottom line: In rising markets cash is trash. In falling markets cash is king. The 50/50 portfolio has an attractive track record.

Please note that the Monday Morning Millionaire Program contains opinions only. It does not provide any investment advice or endorsements.

 

Dr. Milan Somborac

The Monday Morning Millionaire Program supports do-it-yourself (DIY) investors which I have been for over 50 years. About my team and me

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