{"id":35909,"date":"2026-03-23T06:43:10","date_gmt":"2026-03-23T10:43:10","guid":{"rendered":"https:\/\/www.sage.com\/en-us\/blog\/?p=35909"},"modified":"2026-03-23T07:24:26","modified_gmt":"2026-03-23T11:24:26","slug":"what-percent-of-your-portfolio-should-be-cash","status":"publish","type":"post","link":"https:\/\/www.sage.com\/en-us\/blog\/what-percent-of-your-portfolio-should-be-cash\/","title":{"rendered":"What percent of your portfolio should be in cash?"},"content":{"rendered":"<header class=\"entry-header has-dark-background-color entry-header--standard entry-header--has-illustration entry-header--has-illustration--standard\">\n\t<div class=\"container\">\n\t\t<div class=\"entry-header__row row align-center\">\n\t\t\t<div class=\"col col-lg-7 col-xlg-6 entry-header__content\">\n\t\t\t\t\t\t\t<div class=\"component component-single-header\">\n\t\t\t\t\t\t\t\t\t\t<div class=\"entry-header__misc text--subtitle text--uppercase text--small\">\n\t\t\t\t\t\t\t<a href=\"https:\/\/www.sage.com\/en-us\/blog\/category\/money-matters\/\" class=\"entry-header__link\">Money Matters<\/a>\t\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t<div class=\"entry-title-wrapper\">\n\t\t\t\t\t<h1 class=\"entry-title\">\n\t\t\t\t\t\tWhat percent of your portfolio should be in cash?\t\t\t\t\t<\/h1>\n\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t<p class=\"entry-header__description\">\n\t\t\t\t\t\tIt can tricky to determine the right cash allocation in your portfolio, balancing immediate liquidity needs against long-term growth potential. The right cash percentage depends on factors like your risk tolerance, age, income stability, and upcoming expenses. Understanding how to balance these priorities helps you maintain financial flexibility without sacrificing returns. \t\t\t\t\t<\/p>\n\t\t\t\t\n\t\t\t\t\n\t\t\t\t\n\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n\t<div class=\"single-post-details container\">\n\t\t<div class=\"col\">\n\t\t\t<span class=\"posted-on \"><time class=\"entry-date published\" datetime=\"2026-03-23T06:43:10-04:00\">March 23, 2026<\/time><\/span><span class=\"reading-time\"> min read<\/span>\n\t\t<button\n\t\t\ttype=\"button\"\n\t\t\tclass=\"social-share-button button button--icon button--secondary js-social-share-button\"\n\t\t\tdata-share-title=\"What percent of your portfolio should be in cash?\"\n\t\t\tdata-share-url=\"https:\/\/www.sage.com\/en-us\/blog\/what-percent-of-your-portfolio-should-be-cash\/\"\n\t\t\tdata-share-text=\"Please read this interesting article\"\n\t\t>\n\t\t\t<span class=\"social-share-button__share-label\">Share<\/span>\n\t\t\t<span class=\"social-share-button__copy-label\" hidden>Copy Link<\/span>\n\t\t\t<span class=\"social-share-button__copy-tooltip\" aria-hidden=\"true\" hidden>Copied<\/span>\n\t\t<\/button>\n\n\t\t\t\t<\/div>\n\t<\/div>\n<\/header>\n\n\n\n<div class=\"wp-block-post-author has-dark-background-color alignfull\">\n\t<div class=\"container\">\n\t\t<div class=\"col\">\n\t\t\t\t\t\t\t<div class=\"co-authors\">\n\t\t\t\t\t\n\t\t<div class=\"entry-author-wrapper\">\n\t\t\t<a class=\"entry-author\" href=\"https:\/\/www.sage.com\/en-us\/blog\/author\/joechurchwoods\/\">\n\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"40\" height=\"40\" src=\"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2025\/05\/Joe-Yard-2-crop-350x350.jpg\" class=\"entry-author__image\" alt=\"Joe Church Woods\" \/>\t\t\t\t<span class=\"entry-author__name\">Joe Church Woods<\/span>\n\t\t\t<\/a>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n<\/div>\n\n\n\n<p>Deciding how much cash to hold in your investment portfolio means balancing competing priorities.<\/p>\n\n\n\n<p>Hold too little\u00a0and you may be forced to sell investments during downturns or miss buying opportunities. <\/p>\n\n\n\n<p>Hold too much and inflation erodes your purchasing power while long-term returns suffer.\u00a0<\/p>\n\n\n\n<p>For business owners and investors managing both personal wealth and business operations, often with variable income, decisions about cash allocation in a portfolio become even more nuanced.\u00a0<\/p>\n\n\n\n<p>Determining\u00a0the right percentage requires understanding common allocation guidelines, evaluating personal risk factors, and aligning liquidity needs with long-term growth\u00a0objectives.\u00a0\u00a0<\/p>\n\n\n\n<p><strong>Here&#8217;s what we&#8217;ll cover:<\/strong><\/p>\n\n\n<?xml encoding=\"utf-8\" ?><div class=\"wp-block-yoast-seo-table-of-contents yoast-table-of-contents\"><ul><li><a href=\"#h-how-much-nbsp-cash-nbsp-in-nbsp-a-nbsp-portfolio-nbsp-is-enough-nbsp\" data-level=\"2\">How much&nbsp;cash&nbsp;in&nbsp;a&nbsp;portfolio&nbsp;is enough?&nbsp;<\/a><\/li><li><a href=\"#h-what-is-the-goal-of-having-cash-in-your-portfolio\" data-level=\"2\">What is the goal of having cash in your portfolio?<\/a><\/li><li><a href=\"#h-what-s-nbsp-the-difference-between-an-emergency-fund-and-investment-cash-nbsp\" data-level=\"2\">What&rsquo;s&nbsp;the difference between an emergency fund and investment cash?&nbsp;<\/a><\/li><li><a href=\"#h-pros-and-cons-of-holding-cash-in-portfolios-nbsp\" data-level=\"2\">Pros and cons of holding cash in portfolios&nbsp;<\/a><\/li><li><a href=\"#h-factors-that-influence-cash-allocation-in-a-portfolio\" data-level=\"2\">Factors that influence cash allocation in&nbsp;a&nbsp;portfolio<\/a><\/li><li><a href=\"#h-guidelines-for-balancing-growth-and-liquidity-nbsp\" data-level=\"2\">Guidelines for balancing growth and liquidity&nbsp;<\/a><\/li><li><a href=\"#h-where-to-keep-your-cash-nbsp\" data-level=\"2\">Where to keep your cash&nbsp;<\/a><\/li><li><a href=\"#h-final-thoughts-nbsp-nbsp\" data-level=\"2\">Final thoughts&nbsp;&nbsp;<\/a><\/li><li><a href=\"#h-frequently-asked-questions-about-cash-in-portfolios-nbsp\" data-level=\"2\">Frequently asked questions about cash in portfolios&nbsp;<\/a><\/li><\/ul><\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-how-much-nbsp-cash-nbsp-in-nbsp-a-nbsp-portfolio-nbsp-is-enough-nbsp\">How much&nbsp;cash&nbsp;in&nbsp;a&nbsp;portfolio&nbsp;is enough?&nbsp;<\/h2>\n\n\n\n<p>Most financial experts recommend holding between 2% and 10% of your investment portfolio in cash, though this varies based on individual circumstances. <\/p>\n\n\n\n<p>What percent of your portfolio should be in cash depends\u00a0largely on\u00a0your investor profile.\u00a0\u00a0<\/p>\n\n\n\n<p>Different investor types tend to lean toward different allocations:\u00a0<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Conservative investors:<\/strong>\u00a0often hold 10% or more in cash, valuing\u00a0security\u00a0and flexibility over higher returns.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Growth-focused investors:<\/strong>\u00a0typically keep 2% to 5% in cash,\u00a0maintaining\u00a0just enough for opportunistic purchases or minor rebalancing.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Business owners:\u00a0<\/strong>may\u00a0maintain\u00a015% to 25% in readily accessible accounts, prioritizing\u00a0having reserves on hand\u00a0for operational expenses, seasonal fluctuations, and unexpected business needs.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Pre-retirees and retirees:<\/strong>\u00a0often\u00a0increase cash holdings to 5% to 15% or more\u00a0to\u00a0reduce the need to sell investments during downturns.\u00a0\u00a0<\/li>\n<\/ul>\n\n\n\n<p>It\u2019s\u00a0important to note that these are guidelines, not rules. Your specific circumstances will determine your optimal cash allocation. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-is-the-goal-of-having-cash-in-your-portfolio\">What is the goal of having cash in your portfolio?\u00a0<\/h2>\n\n\n\n<p>Having cash in your portfolio&nbsp;provides liquidity, stability, and flexibility&nbsp;without disrupting your long-term investment strategy.&nbsp;<\/p>\n\n\n\n<p>Cash acts as a buffer between your short-term needs and your long-term assets.&nbsp;It reduces the likelihood that&nbsp;you\u2019ll&nbsp;need to sell stocks or bonds during market downturns, allows you to rebalance efficiently, and gives you the ability to act quickly when opportunities arise.&nbsp;<\/p>\n\n\n\n<p>In portfolio terms, &#8220;cash&#8221; includes checking and savings accounts, money market funds, certificates of deposit, and short-term\u00a0Treasury bills. <\/p>\n\n\n\n<p>These vehicles prioritize\u00a0preserving\u00a0capital and\u00a0providing\u00a0near-term access\u00a0over growth.\u00a0<\/p>\n\n\n\n<p>Cash in an investment portfolio serves several&nbsp;important functions:&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Liquidity for\u00a0opportunities:<\/strong>\u00a0allows you to\u00a0invest during market corrections or pursue business opportunities without scrambling to sell other assets.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Volatility\u00a0buffer:<\/strong>\u00a0reduces the risk of forced sales during downturns.\u00a0\u00a0<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Peace of\u00a0mind:<\/strong>\u00a0helps you stay disciplined during market swings.\u00a0<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Operational flexibility for\u00a0businesses:<\/strong>\u00a0covers payroll gaps, uneven revenue cycles, or unexpected expenses.\u00a0<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Rebalancing tool:<\/strong>\u00a0makes\u00a0it easier to adjust allocations\u00a0as market conditions change.\u00a0\u00a0<\/li>\n<\/ul>\n\n\n\n<p>Cash&nbsp;isn\u2019t&nbsp;meant to drive long-term returns. Instead, its role is to provide stability and flexibility that allows you to keep the rest of your portfolio invested&nbsp;with&nbsp;confidence.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-s-nbsp-the-difference-between-an-emergency-fund-and-investment-cash-nbsp\">What\u2019s&nbsp;the difference between an emergency fund and investment cash?&nbsp;<\/h2>\n\n\n\n<p>Your emergency fund should be a separate, untouchable fund to be used only for crucial needs, while investment cash is actively used to help you manage your portfolio.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-emergency-fund\"><strong>Emergency fund\u00a0<\/strong><\/h3>\n\n\n\n<p>Your emergency fund should\u00a0be enough to cover three to six months of essential expenses. It should be held\u00a0in a dedicated, easily accessible account outside\u00a0of\u00a0your investment portfolio.\u00a0<\/p>\n\n\n\n<p>Business owners should increase this to six to\u00a012\u00a0months of combined personal and business expenses.\u00a0This fund protects you from\u00a0financial catastrophes like\u00a0an\u00a0unexpected\u00a0job loss\u00a0or the sudden need for\u00a0major repairs\u00a0to your home or vehicle.\u00a0<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-investment-cash\">Investment cash<\/h3>\n\n\n\n<p>Investment portfolio cash\u00a0is the 2%-10% (or more) held within your investment accounts for opportunistic investing, portfolio rebalancing, and short-term liquidity needs. Unlike your emergency fund, this cash fluctuates based on market conditions and opportunities.\u00a0<\/p>\n\n\n\n<p>Establish your emergency fund first, before\u00a0optimizing\u00a0your investment portfolio cash. Once it&#8217;s funded, resist the temptation to invest\u00a0emergency money. Its purpose is stability, not growth.\u00a0<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-pros-and-cons-of-holding-cash-in-portfolios-nbsp\">Pros and cons of holding cash in portfolios&nbsp;<\/h2>\n\n\n\n<p>Understanding the advantages and disadvantages&nbsp;of having cash in a portfolio&nbsp;helps you make informed allocation decisions.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-advantages\"><strong>Advantages\u00a0<\/strong><\/h3>\n\n\n\n<p>Benefits of a healthy cash percentage in your portfolio include:  <\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Immediate access to funds.\u00a0<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>No market volatility risk to principal.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Flexibility to seize opportunities.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Reduced emotional pressure during downturns.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-disadvantages\"><strong>Disadvantages<\/strong>\u00a0<\/h3>\n\n\n\n<p>But there are some disadvantages to be aware of as well:  <\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Inflation erosion over time.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Opportunity cost compared to higher-return assets.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Structurally lower long-term returns.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Risk of excessive conservatism.<\/li>\n<\/ul>\n\n\n\n<p>The right&nbsp;allocation strategy&nbsp;acknowledges both sides. You need enough cash&nbsp;to support stability, but not so much that it meaningfully slows your ability to build wealth.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-factors-that-influence-cash-allocation-in-a-portfolio\">Factors that influence cash allocation in\u00a0a\u00a0portfolio\u00a0<\/h2>\n\n\n\n<p>Several personal factors&nbsp;should&nbsp;guide your decision&nbsp;on what percent of your portfolio should be in cash.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-risk-tolerance-nbsp\">Risk tolerance&nbsp;<\/h3>\n\n\n\n<p>Risk tolerance describes your comfort with investment volatility and potential losses.\u00a0<\/p>\n\n\n\n<p>It&#8217;s\u00a0both psychological and financial, encompassing your willingness to take on risk as well as\u00a0your\u00a0ability to absorb losses.\u00a0<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Conservative investors with\u00a0low risk\u00a0tolerance often hold 10% to 20% or more in cash, prioritizing capital\u00a0preservation\u00a0and certainty over higher returns.\u00a0\u00a0<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Aggressive investors with higher\u00a0risk tolerance\u00a0may keep only 2% to 5% in cash, viewing it primarily as a resource to use when buying opportunities arise.\u00a0<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-age-and-timeline-nbsp\">Age and timeline&nbsp;<\/h3>\n\n\n\n<p>Your age and investment timeline significantly influence&nbsp;the&nbsp;appropriate&nbsp;amount&nbsp;of cash to keep in your portfolio.&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Younger investors (20s-40s):<\/strong>\u00a0often hold 2% to 5% in cash,\u00a0putting the rest into investments that can produce long-term growth.\u00a0<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Mid-career investors (40s-50s):\u00a0<\/strong>typically\u00a0maintain\u00a05% to 10% in cash, balancing growth with awareness of upcoming expenses like college tuition or business expansion.\u00a0<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Pre-retirees (50s-60s):<\/strong>\u00a0generally\u00a0hold 10% to 15% or more, focusing on preserving capital as retirement nears.\u00a0<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Retirees:<\/strong>\u00a0often\u00a0maintain\u00a010% to 20% or\u00a0more\u00a0in cash and cash equivalents, prioritizing having enough access to funds for living expenses and avoiding having to sell\u00a0stocks or bonds at unfavorable times.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-personal-and-business-cash-flow-needs\">Personal and business cash flow needs\u00a0<\/h3>\n\n\n\n<p>Income stability significantly affects cash needs.\u00a0For instance, salaried employees with predictable paychecks can typically hold less cash in their portfolios.\u00a0<\/p>\n\n\n\n<p>But business owners and commission-based workers\u00a0have more variable incomes that make\u00a0higher cash allocations practical. <\/p>\n\n\n\n<p>A\u00a0consultant who earns 70% of their annual income in the first quarter might keep 20% of their portfolio in cash to\u00a0help\u00a0smooth out\u00a0their\u00a0cash flow without touching long-term investments.\u00a0<\/p>\n\n\n\n<p>Upcoming expenses also matter. If\u00a0you&#8217;re\u00a0planning a major purchase within two years, keep those funds in cash or near-cash vehicles rather than volatile assets. <\/p>\n\n\n\n<p>The certainty of having funds when\u00a0you need them\u00a0outweighs potential investment gains you might miss.\u00a0<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-inflation-and-opportunity-cost-nbsp\">Inflation and opportunity cost&nbsp;<\/h3>\n\n\n\n<p>Opportunity cost\u00a0represents\u00a0what you give up by choosing one\u00a0option\u00a0over another. When you hold cash instead of investing\u00a0it, the opportunity cost is the potential returns you miss.\u00a0<\/p>\n\n\n\n<p>For example, if stocks return 8% annually and your cash earns 4%, the opportunity cost is\u00a0roughly 4%\u00a0per year.\u00a0\u00a0<\/p>\n\n\n\n<p>Inflation erodes\u00a0the\u00a0purchasing power\u00a0of cash\u00a0over time. <\/p>\n\n\n\n<p>If inflation runs 3% annually and your cash earns 4%, your real return is only 1%.\u00a0In\u00a0contrast,\u00a0earnings from\u00a0stocks have historically outpaced inflation by wider margins over\u00a0long periods.\u00a0<\/p>\n\n\n\n<p>However, liquidity also has value. The goal&nbsp;shouldn\u2019t&nbsp;be to have no cash in your portfolio but to hold the&nbsp;minimum&nbsp;amount necessary for your needs.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-guidelines-for-balancing-growth-and-liquidity-nbsp\">Guidelines for balancing growth and liquidity&nbsp;<\/h2>\n\n\n\n<p>Avoid making large allocation changes based solely on short-term market forecasts. <\/p>\n\n\n\n<p>Market timing rarely works consistently, and shifting allocations around to pursue short-term gains often means\u00a0missing out on\u00a0the gains you could have realized with a more consistent, long-term approach.\u00a0Instead:\u00a0<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Set a baseline allocation aligned with your\u00a0risk\u00a0tolerance and timeline.\u00a0<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Review\u00a0your allocations\u00a0quarterly or semi-annually.\u00a0<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Rebalance\u00a0your portfolio\u00a0when allocations drift meaningfully (e.g., 5% off target).\u00a0<\/li>\n<\/ul>\n\n\n\n<p>Maintaining&nbsp;adequate cash makes rebalancing smoother and reduces the need to sell other assets unexpectedly.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-where-to-keep-your-cash-nbsp\">Where to keep your cash&nbsp;<\/h2>\n\n\n\n<p>Where you keep&nbsp;the&nbsp;cash&nbsp;in your&nbsp;portfolio&nbsp;affects both&nbsp;its&nbsp;accessibility and&nbsp;potential&nbsp;returns. The right vehicle depends on when&nbsp;you&#8217;ll&nbsp;need the money.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-high-yield-savings-or-money-market-funds-nbsp\">High-yield savings or money market funds&nbsp;<\/h3>\n\n\n\n<p>High-yield savings accounts offer FDIC insurance up to $250,000, instant access, and competitive rates.&nbsp;They&#8217;re&nbsp;ideal for emergency funds and short-term cash you might need&nbsp;to use quickly.&nbsp;<\/p>\n\n\n\n<p>Money market funds invest in short-term debt securities and typically offer slightly higher returns, though\u00a0they&#8217;re\u00a0not FDIC-insured. <\/p>\n\n\n\n<p>Access is generally\u00a0same-day or next-day.\u00a0They&#8217;re\u00a0available through most brokerage accounts,\u00a0so you can keep\u00a0your cash and investments in one place.\u00a0<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-short-term-nbsp-certificates-of-nbsp-deposit-or-nbsp-treasury-bills-nbsp\">Short-term&nbsp;Certificates of&nbsp;Deposit or&nbsp;Treasury bills&nbsp;<\/h3>\n\n\n\n<p>Certificates of\u00a0Deposit lock in a fixed interest rate for a specified term, typically three months to five years. <\/p>\n\n\n\n<p>Rates often exceed\u00a0those for\u00a0savings accounts, but you face penalties for early withdrawal. CDs work well when you know you\u00a0won&#8217;t\u00a0need specific funds for a set period.\u00a0<\/p>\n\n\n\n<p>You may want to consider\u00a0spreading out\u00a0maturities: put a\u00a0portion\u00a0of your cash in a three-month CD, another in a six-month CD, and the rest in a 12-month CD.\u00a0<\/p>\n\n\n\n<p>You\u2019ll\u00a0gain access to the funds as each one matures while earning higher yields on the longer-term options.\u00a0<\/p>\n\n\n\n<p>Treasury bills are short-term government securities maturing in four, eight, 13, 26, or 52 weeks.\u00a0<\/p>\n\n\n\n<p>They&#8217;re\u00a0extremely safe, backed by the U.S. government, and interest is exempt from state and local taxes. You can sell T-bills before maturity, though prices fluctuate slightly with interest rates.\u00a0<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-final-thoughts-nbsp-nbsp\">Final thoughts&nbsp;&nbsp;<\/h2>\n\n\n\n<p>There\u2019s\u00a0no single\u00a0right cash allocation\u00a0for\u00a0your portfolio, as the best percentage will vary for each person.\u00a0<\/p>\n\n\n\n<p>Most investors\u00a0benefit\u00a0from holding 2% to 10% in cash within their portfolios,\u00a0adjusting that figure higher for those who own a business or are closer to retirement.\u00a0<\/p>\n\n\n\n<p>The\u00a0optimal\u00a0allocation\u00a0ultimately depends\u00a0on your\u00a0risk\u00a0tolerance, age, income stability, and upcoming expenses. Review your allocations\u00a0periodically, but resist making dramatic changes based on market predictions.\u00a0<\/p>\n\n\n\n<p>For business owners managing both personal investments and business finances, maintaining clear visibility of both is\u00a0essential.\u00a0<\/p>\n\n\n\n<p><a href=\"https:\/\/www.sage.com\/en-us\/industry\/financial-services\/\" target=\"_blank\" rel=\"noreferrer noopener\">Investment accounting software<\/a>\u00a0like Sage\u00a0Intacct helps you\u00a0monitor\u00a0cash flow patterns across accounts,\u00a0maintain\u00a0a clear separation between personal and business finances, and make data-driven decisions about allocations. <\/p>\n\n\n\n<p>This visibility prevents common mistakes like over-investing business cash needed for operations or under-funding personal emergency reserves.\u00a0<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-frequently-asked-questions-about-cash-in-portfolios-nbsp\">Frequently asked questions about cash in portfolios&nbsp;<\/h2>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-how-often-should-i-review-nbsp-the-nbsp-cash-allocation-in-my-portfolio-nbsp\">How often should I review&nbsp;the&nbsp;cash allocation in my portfolio?&nbsp;<\/h3>\n\n\n\n<p>Most investors should review their cash allocation quarterly or semi-annually, aligning these reviews with broader portfolio check-ins.&nbsp;You should also review your portfolio whenever you experience a major life or business change.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-should-i-hold-more-cash-if-i-run-a-seasonal-business-nbsp\">Should I hold more cash if I run a seasonal business?&nbsp;<\/h3>\n\n\n\n<p>Yes.&nbsp;Seasonal business owners typically need higher cash reserves than&nbsp;people with steadier&nbsp;revenue.&nbsp;Consider&nbsp;maintaining&nbsp;15% to 25% of your overall assets in accessible cash to bridge&nbsp;revenue gaps and avoid selling long-term investments during slow periods.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-how-much-cash-is-too-much-in-a-portfolio-nbsp\">How much cash is too much in a portfolio?&nbsp;<\/h3>\n\n\n\n<p>For most investors, holding more than 20% in cash within an investment portfolio can be problematic. It may begin to create a noticeable opportunity cost unless there is a specific near-term need. Cash becomes excessive when it meaningfully slows long-term growth without serving a clear liquidity purpose.\u00a0<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-should-you-increase-cash-during-a-market-downturn-nbsp\">Should you increase cash during a market downturn?&nbsp;<\/h3>\n\n\n\n<p>As a general rule of thumb, no. Increasing cash during a downturn often locks in losses rather than\u00a0reduces\u00a0risk. Selling investments after prices have fallen can undermine long-term returns and disrupt your allocation strategy. <\/p>\n\n\n\n<p>Instead of reacting to short-term volatility,\u00a0maintain\u00a0your predetermined cash allocation. If your allocation is already aligned with your goals, market fluctuations alone usually\u00a0don\u2019t\u00a0justify major shifts.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>It can tricky to determine the right cash allocation in your portfolio, balancing immediate liquidity needs against long-term growth potential. The right cash percentage depends on factors like your risk tolerance, age, income stability, and upcoming expenses. Understanding how to balance these priorities helps you maintain financial flexibility without sacrificing returns. <\/p>\n","protected":false},"author":1847,"featured_media":9304,"menu_order":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_sage_video":false,"post_featured_image_hide":false,"footnotes":""},"categories":[43],"tags":[195,153,34,155],"business_type":[40,41],"lilypad":[],"context":[],"industry":[57],"persona":[100,98,96,97],"imagine_tag":[242,468,233,230],"coauthors":[592],"class_list":["post-35909","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-money-matters","tag-boss-your-business","tag-growing-a-business","tag-small-business","tag-staying-competitive","business_type-small-business","business_type-growing-business","industry-financial-services"],"sage_meta":{"region":"en-us","author_name":"Joe Church Woods","featured_image":"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2022\/04\/GettyImages-1325244864.jpg","imagine_tags":{"242":"Financial services","468":"Grow your business","233":"Medium Businesses","230":"Small business"}},"distributor_meta":false,"distributor_terms":false,"distributor_media":false,"distributor_original_site_name":"Sage Advice US","distributor_original_site_url":"https:\/\/www.sage.com\/en-us\/blog","push-errors":false,"_links":{"self":[{"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/posts\/35909","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/users\/1847"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/comments?post=35909"}],"version-history":[{"count":5,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/posts\/35909\/revisions"}],"predecessor-version":[{"id":35923,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/posts\/35909\/revisions\/35923"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/media\/9304"}],"wp:attachment":[{"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/media?parent=35909"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/categories?post=35909"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/tags?post=35909"},{"taxonomy":"business_type","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/business_type?post=35909"},{"taxonomy":"lilypad","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/lilypad?post=35909"},{"taxonomy":"context","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/context?post=35909"},{"taxonomy":"industry","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/industry?post=35909"},{"taxonomy":"persona","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/persona?post=35909"},{"taxonomy":"imagine_tag","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/imagine_tag?post=35909"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/coauthors?post=35909"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}