What are your thoughts on keeping cash in your portfolio? šŸ’·

Investing and Markets šŸ“ˆ
1

With the addition of money market funds, such as CSH2, itā€™s got me thinking about this subject.

Emergency fund aside, Iā€™ve always invested every penny as soon as I can

Itā€™s never made much sense to me to keep cash as inflation erodes away at its value and Iā€™m investing for the long-term so I ideally want to be in equities.

It does seem a more attractive proposition nowadays with the base rate at 5%. (Although, in reality, itā€™s not too different from when rates were zero and inflation was 2-3%.)

Part of me likes the idea of setting some dry powder aside for liquidity purposes.

That way, if a once-in-a-lifetime opportunity arises I can sell my liquidity fund to buy something else.

But it feels like trying to time the market which is rarely a good idea.

Iā€™m minded to stick with plan A because the ā€˜if in doubt, do nowtā€™ adage has served me well.

However, Iā€™d be interested in everyoneā€™s thoughts.

Do you keep cash? If so, why? Is it a set amount or percentage? How did you arrive at that number?

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2

Would have been handy in Spring / Summer 2020, but that was a once in a lifetime event.

For the average person with a long term outlook, I wouldnt give it too much consideration.

A needless and likely pointless luxury in all probabilityā€¦unless you have bundles of cash to play with or a clear plan and a crystal ball.

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3

I think this may be key. A lot of uber wealthy people seem to have 5-20% in cash but us mere mortals are probably better off investing the lot and accepting weā€™re not the second coming of Warren Buffett.

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4

I have been keeping a small portion of cash available which I am likely going to put into CSH2 for a short period.

Ideally I would be putting that cash into US treasuries as a hedge against my other position but over the last year and half they have been acting in tandem with stocks and I am looking for them to decouple again.

In general im in the camp of of having all my money work for me in the market but I do realise my position currently almost contradicts this statement as I have looked at the recent trend in the bond market and made changes accordingly.

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5

Appreciate your thoughts on this.

There does seem to be a bit of a herd mentality around money market funds at the moment and I canā€™t quite get my head around the rationale.

I think thereā€™s an element of people jumping on the bandwagon late.

Money market funds are great as an alternative to savings when rates are rising quickly because itā€™s passed on right away.

But with rates beginning to plateau, the opposite may become true and people may find itā€™s better to lock in a fixed rate on their savings.

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6

I have around 10% value in cash sort of. Most of it is in limited orders. So, technically is still cash. I could cancel the orders.

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7

Usually keep my emergency money in an easy to access savings account. If the once in a lifetime opportunity arrives I take money from my emergency savings then the following months top up the savings account, worked well with the flash crashes during COVID.

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8

In my main ISA I have around 40% cash in CSH2 - Iā€™m using the ā€˜value averagingā€™ technique. So sell a bit of CSH2 & buy into my portfolio when (if) there is a better pricing opportunity. I still also buy regularly regardless of price - just not as much Ā£ as when there is a better price.

Iā€™m doing this on my ETF portfolio, not individual stocks.

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9

my problem is I dont have enough cash to buy even 1 share in CSH2, i do wish fractional options were available

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10

I had at least four these ā€œlifetime eventsā€ in my investing career, so not sure that it is that lifetime.

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11

Fair enough. I guess its all relative. Everyones circumstances and ideas of an opportunity are different.

12

Yeah - I hear ya, my main ISA is on Invest Engine so I can buy & sell fractions there.

Freetrade said they are looking at adding another 8 Money Market funds, so hopefully there will be a cheaper option available shortly.

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13

XSTR is the alternative to CSH2. The difference is a higher fee and it distributes the income

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14

Thatā€™s my plan fixed rate in savings but they expect a few more rises before a fall so hoping to lock in maybe Oct time but if it sounds like they will lower rates before this Iā€™ll lock in sooner.

15

Canā€™t be ā€˜debankedā€™ you if you have cash!