What are your Investment Rules?

[Valuegrowth]

Holding Cash In Portfolio
https://www.rbcroyalbank.com/en-ca/m...os-and-cons-2/

All the reasons for holding cash given here & other articles fall flat in my view
1) Liquidity:How liquid does a proportion of the portfolio need to be given that liquidity can be provided by selling shares & money is deposited in the bank in 1-2 days
2)Cash to deploy if an opportunity presents itself.
Why wouldn't the poorest share performers in the portfolio be sold instead?
3)Less volatility in the portfolio because cash doesn't lose its value when markets tank?
I've held investments in FUM with up to 30% cash at times & haven't noticed less volatility in performance

Why would an investor pay an advisor to hold cash?
Wouldn't it be far better to be 100% invested in the best opportunities available?

Real life example as one of the trustees of one of the trusts wanted cash available for a rainy day & took 6 years to convince otherwise.
30% of trust funds were held in a cash account
Returns on investments & cash were 9% compounding over 6 years
Where as if all the funds were invested returns would have been 15 % compounding over 6 years
That was an opportunity lost 6 % compounding
That is disappointing

For an individual my view, if practical, is as I've written before its better to have undrawn OD or Revolving Credit as an "cash account" if practical, secured over property
This only costs around 0.5% or less for unused funds,works out at 0.05% if it's an amount equivalent to 10% of FUM.

Cash in hand means can sleep peacefully. I have read and listened to so many gurus in the past. Not any longer. After making mistakes repeatedly, Now I am very comfortable with keeping some cash for emergencies, to take advantage from investment opportunities coming from fire sales and out of favour areas. Besides It’s not bad to take some profits from over valued stocks and raise cash from stocks which are not going to do well. It is better to have cash than keeping money in a falling asset.


"Pros: Benefits of holding cash

Liquidity: Cash, whether in the form of savings or chequing accounts, money market funds, or short-term deposits gives you ready access when you need it.
Zero risk: Cash comes with no capital risk. If you have $100 today, tomorrow you’ll still have $100. That’s what makes it ideal for an emergency fund or a down payment. It can be a safe haven.
Opportunity: Having cash allows you to take advantage of investment opportunities when you choose. For example, following the big market crashes in 1987, 2000, 2008 and 2020, investors who had cash could purchase assets at greatly reduced prices.
Asset Allocation: Having a cash position in your portfolio can add diversity, and diversification can be key to managing risk."