Having a portion of your portfolio in cash is a smart move for any investor. A common-sense strategy is to keep at least 5% of your portfolio in cash or cash equivalents, while some professionals may prefer to have 10-20%. This way, you'll always have some money available to cover unexpected expenses or take advantage of market sales. It's recommended that you keep around 5% of your net worth in cash.
This way, you'll be able to handle any emergency that may arise and still have some money left over to invest. Having a portion of your portfolio in cash also gives you the flexibility to take advantage of market opportunities when they arise. When deciding how much cash to keep in your stock portfolio, it's important to consider your individual financial situation. If you're a more conservative investor, you may want to keep a larger portion of your portfolio in cash.
On the other hand, if you're more aggressive, you may be comfortable with a smaller percentage. It's also important to remember that having too much cash in your portfolio can be detrimental. Cash doesn't earn any returns, so it's important to make sure that you're not missing out on potential gains by having too much money sitting idle. Overall, having a portion of your stock portfolio in cash is a smart move for any investor.
It gives you the flexibility to take advantage of market opportunities and handle any unexpected expenses that may arise. Just make sure that you're not keeping too much cash in your portfolio, as this can be detrimental to your long-term financial goals.