Make It Stack

Make it Stack #10 - Why holding cash is trash in 2021?

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Welcome to "Make it Stack" with Will Waterhouse, the podcast designed to demystify the world of saving and investing for young people. 

In this episode, I talk about holding cash vs. stocks. How have they performed over the last few decades and when should you consider increasing/decreasing your allocation to each asset class?  

Topics discussed: Have have stocks and cash performed over the long term? Is tide turning against cash? How much cash should you hold?  

Key takeaways:

  • Over the long run, stocks have massively outperformed cash as a means of saving.
  • Cash has become significantly less attractive as a method of long term saving post global financial crisis. The trend will likely continue given the expansionary monetary policy to combat COVID-19.
  • The longer your investment time horizon, the greater your chances of success in the stock market
  • As a general rule of thumb, individuals should have a rainy day fund which covers 6 months' expenses. If you are looking to make a large purchase in the near future you should increase your cash weighting to mitigate downside risk.
  • Don't sit on significant excess cash. The consequences of doing this could burn a hole in your wallet after inflation

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    Website: https://caytonanalytics.com/

    This podcast is for educational purposes only and should not be construed as financial advice.

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    Make It StackBy Will Waterhouse