Future Needs and Investments Determine Members’ Cash Allocations

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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.”

If you want to become an effective manager of your own assets and achieve your financial goals, consider a risk-free 30-day Trial AAII Membership.

 

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