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The Role Cash Serves in a Portfolio

Cash in a portfolio should have a specific role in a portfolio. We see cash as fitting in one of these three categories:

  • Liquidity provisions: this is to cover expenses and emergency funds.  This includes money to pay for the mortgage, the unexpected new roof, basic living expenses, etc.
  • Defensive position: Cash in this pot acts as a cushion against stock/bond volatility.
  • Offensive position:  In some cases, we recommend keeping higher levels of cash until trends in the market change.  In this case, we maintain cash reserves for future investments.

How much cash in each category depends on your expense pattern, your goals and risk tolerance.

Contact us today if you’re interested in making your cash work harder.