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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