Having some cash in portfolio is useful when the markets correct.
I learnt it hard way, few years back, when I was all in into equity & market corrected.
Pain of your portfolio going down is bad, but pain of missing once in lifetime opportunities available at lucrative valuations because of lack of cash is worst.
That day I decided to carry some means of cash. Tips on how I manage / raise cash in portfolio:
1. I’ve my businesses which brings me regular cash flows.
2. These days before going home, I make sure I’ve roughly 5-10% of cash in portfolio.
3. Recently, I’ve kept Goldbees as a natural hedge in my portfolio. When Stock Market falls, Goldbees usually rises. I book profits from Goldbees and invest the proceeds into equity at beaten levels.
Having some cash does gives you an edge over investors and accumulate on dips when others are virtually out of cash.
Also it keeps me at peace that no matter how much market falls I’ll be position to buy the dips.
Keep your cash flows strong.
No matter how much you earn, a poor cash flow management will haunt your financial freedom.
On a different note, Mr. W Buffett is carrying > $100 Billions in cash these days.
