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Future Needs and Investments Determine Members’ Cash Allocations

Last month’s Asset Allocation Survey special question asked AAII members what determines how much they allocate to cash. More than three out five respondents (62%) said projected needs [required minimum distributions (RMDs), living expenses, emergencies, etc.] and/or future investment opportunities. Nearly 26% said their cash allocations are primarily determined by their short-term expectations for the stock market.

Here is a sampling of the responses:

  • “Three to five years of needs so I don’t have to sell at a disadvantageous time.”
  • “I like to keep a minimum of 18 months in cash to ride out economic bumps.”
  • “Keep some in reserve for buying opportunities.”
  • “My sense of safety needed to have a good night sleep, plus room to maneuver.”
  • “My age and my RMD requirements.”

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