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