Retirement: How Much Cash Should You Hold?

Mar. 20, 2021 11:00 AM ET, , , , , , 826 Comments

Summary

  • Investors - especially retirees - often like to have a large portion of their portfolios in cash or cash-like assets.
  • In deciding how much cash to hold, there are considerations of liquidity and wealth maximization.
  • These are really distinct issues that should be analyzed separately.
  • While maintaining reasonable liquidity is important, there may be other ways of doing it than maintaining large cash reserves.
  • There may be times at which total return can be maximized by having a lot of assets in cash, but this is probably not one of those times.
  • This idea was discussed in more depth with members of my private investing community, High Dividend Opportunities. Learn More »
Piggy Bank, Stack of Coins and New Year 2021
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This report was co-written by HDO's retirement expert Philip Mause.

A question that frequently arises – especially, but not exclusively, for retirees – is "how much cash should I try to hold?" For the purpose of addressing this issue, the term "cash" does not really refer only to currency but instead

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This article was written by

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Rida Morwa is a former investment and commercial Banker, with over 35 years of experience. He has been advising individual and institutional clients on high-yield investment strategies since 1991.

Rida Morwa leads the Investing Group High Dividend Opportunities where he teams up with some of Seeking Alpha's top income investing analysts. The service focuses on sustainable income through a variety of high yield investments with a targeted safe +9% yield.

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Analyst’s Disclosure:I am/we are long ARCC, MO, AND T. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Treading Softly, Beyond Saving, PendragonY, Preferred Stock Trader, and Philip Mause all are supporting contributors for High Dividend Opportunities. Any recommendation posted in this article is not indefinite. We closely monitor all of our positions. We issue Buy and Sell alerts on our recommendations, which are exclusive to our members.

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