An fascinating article about buyers carrying an excessive amount of money was in as we speak’s Wall Street Journal. There’s nothing within the piece that’s inaccurate or deceptive; it’s just a bit slender and will use higher framing.1
I wish to handle 5 parts that put the problem of how a lot money you have to be carrying right into a broader perspective:
1. Home Cash: Everyone desires to match the present market increase to the late 90s – I disagree on valuations and bubbliciousness, however enable me to share my expertise from that period; individuals who weren’t managing cash then won’t pay attention to the historical past.
I’ve vivid mid-Nineteen Nineties recollections of purchasers calling to promote shares. It was the 14th or fifteenth yr of a 19-year bull market. They needed to roll out of some extremely appreciated equities into actual property – a trip property or an improve to their main residence. They willingly gave up a number of years of future fairness returns in alternate for an instantaneous enchancment to their life-style.
A reminder for particular person buyers: you aren’t hedge fund managers competing in league tables for bragging rights; you might be people attempting to stay and revel in your life, giving your loved ones the very best alternatives and experiences you’ll be able to.
At present, we’re 17 years post-GFC backside; many individuals are sitting on enormous good points. I by no means have an issue when purchasers wish to take one thing off the desk to make a significant buy {that a}) they’ll afford and b) brings them pleasure.
2. Why Not Bonds? When you’re in your 20s, 30s, or 40s, you’re in all probability higher off in an all-equity portfolio (assuming you might have the self-discipline to not panic each drawdown). The anecdote the WSJ begins with is a 75-year-old retiree with 85% fairness and 15% cash market. It asks, “Why not personal some bonds as a substitute of the cash market?”
The quick reply is certainty. In case you are mapping out your annual spending, you realize precisely what you might have and what every invoice will probably be when it comes due. Retirees (or anybody dwelling off of their investments) want certainty to pay their bills. In an period of ~3% inflation, typical cash markets have you ever barely forward of CPI. SNAXX (for instance) is a favourite Schwab cash market yielding 3.65%. (0.19% expense ratio).
The longer reply is the tradeoff: Are you getting paid sufficient yield to compensate for any extra danger you assume? Funding-grade (IG) bond funds yield ~4.4%; exit 5–10 years and, in alternate for extra period danger, yield ~4.9%. At 10+ years, you might be at ~5.4%. The longer the period, the extra delicate bonds are to adjustments in rates of interest. When you have a look at Munis, you get ~4%—for high-income buyers in high-tax states, that could be a 6.4% taxable equal yield.
The trade-off? Most of those funds skilled a variety of volatility in 2024-25. The priority is the timing of when money is required right into a bond drawdown.2
3. Good Planning: For a 65-year-old+ investor, retaining a modest pile of money will not be the worst factor they’ll do. Mapping out your liquidity wants for the yr, whether or not it’s quarterly tax filings, philanthropy, RRE taxes, mortgage funds, wedding ceremony items, or journey and the like, is just a cushty type of matching present property to future liabilities.
If realizing these money makes use of aren’t susceptible to a bond fund drawdown; if it makes it simpler to funds your annual spending; if all the above means that you can sleep properly at evening, then you might have your reply to the MM or Bond fund query.
4. My priors: I don’t consider particular person buyers must wring out each final foundation level of yield at the price of their very own consolation ranges. Typically, we hand over rounding errors of returns in alternate for much less stress.
Every little thing in investing (and life) is a sequence of tradeoffs; we wish to make the very best selections we are able to with restricted details about an unsure future. This consists of yields, inflation, and the long run course of rates of interest.
5. Embrace Pleasure: The time to defer gratification is when you find yourself younger, with many years of compounding forward of you.
My favourite tales from advisors and purchasers are about households who’re reluctant to spend as a result of they’re nervous, having lived by means of the Dotcom implosion, the GFC, Flash Crash, COVID, and 2022. But when the numbers say they’ll simply afford to take the whole prolonged household to go to the outdated nation, or to purchase that trip property, or to pay for his or her youngsters’ first-home down funds or their grandkids’ school, then why the hell not?
What else is the aim of cash if to not stay and be joyful in our restricted time on this planet?
~~~
In case you are the type of one that desires to squeeze each final foundation level of yield out of your money, then – relying upon your revenue and tax scenario – an intermediate IG Corp or Muni fund or SMA makes a variety of sense.
If a number of thousand {dollars} in extra yield over the course of spending down a pile of money every year isn’t as vital as your peace of thoughts, if it makes you extra comfy, then maybe a cash market fund is the proper reply for you. It is determined by the specifics of your preferences and particular person psychology.
Like a lot on this area, there isn’t any one-size-fits-all resolution.
The important thing to creating a superb money administration resolution is knowing the trade-offs and the {dollars} concerned. An knowledgeable, considerate course of that considers all of those elements will lead you to the very best resolution for you and your particular person circumstances.
See additionally:
Wealth Management Has a $3 Trillion Problem: Investors Are Keeping Too Much Cash
By Miriam Gottfried
WSJ, Aug. 12, 2026
Beforehand:
Overvalued, Bubble, or Revolution? (July 17, 2026)
__________
1. The most effective information about this text? At the very least we’re not speaking about folks sitting with 100s of 1000s of {dollars} in 0.25% yielding (or worse) checking accounts…
2. There could also be some PTSD following the 16% drawdown within the Bloomberg US Mixture Bond Index (AGG) in 2022.
