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.