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You go to the club in your desperate you’re gonna get desperate results okay every single one of you guys out there should be holding some cash and i’m gonna kind of get into what as a percent of your portfolio you should hold in cash at all times and then kind of why you should be holding some cash right now by the way if you’re misunderstanding why i’m saying cash
It doesn’t mean you necessarily need to be holding physical cash what this basically means it is it means money that you can easily invest in your accounts liquid money maybe money that’s in a savings account checking account maybe it’s in actual physical cash whatever that you can funnel into your portfolio maybe it’s just money that you hold in your brokerage
Account if you have a count of fidelity or td ameritrade or robin hood or whatever maybe just money you kind of hold in there so the way i kind of think about things is you got your obviously you got like an emergency account everybody should have an emergency account this account is it has nothing to do with investing this account is money that’s pretty much
Untouchable unless it’s literally an emergency and you should always have like at least one month of your expenses okay so you at least one month if not multiple months and this is untouchable money that’s only for emergency situations but then you should have a good sum of money that is basically in you know checking accounts or or you know savings accounts and
Things like that that this money or in your brokerage account this money just ready to go and ready to invest whenever you whenever you see an opportunity whenever you want to invest that money is there okay and then you actually have your brokerage account money which is all in your brokerage account and should be invested okay so that’s kind of the way i like to
Think about things know i used to be a hundred percent invested at all times okay i used to be one hundred percent invest at all times i would have basically almost no money on the sidelines at all all i would have is my little emergency money that if it’s an emergency happened i lost my job or something like like i had some emergency money everything was always
Invested and then basically when i get some new money coming in i would put that in the account immediately and it would just be merely a hundred percent invested at all times that was several years ago i do not do that anymore i do not do that anymore and i’ll explain why also you could be 0% invested meaning you no money in the market at all and you definitely
Wouldn’t want to be like that i mean i’m there’s so many people i’ve come across over the last ten years of me being invested right that literally have nothing invested and they see the markets going up and they see this stock and that stock in real estate prices going up and up and they’ve watched this for years and years and they’ve never participated they’ve
Always had nothing invested and they’ve missed out on you know ridiculous amounts of gains you could have pretty much been in any stock you know you you imaginable in 2000 you know 9 2010 and and it held it to today and been up massively guys absolutely massively so you don’t want to be a hundred percent invested you don’t want to be zero percent so where do you want
To fall in the spectrum of how much you want invested and then why do you need to always you know have some money basically that i call sideline money it’s it’s sideline money well my opinion on this is you should always hold between 10 and around 30 percent of your total portfolio in cash in my opinion in cash basically meaning just money that’s on the sidelines
Just waiting waiting for an opportunity to invest okay 10 to 30 percent 10 percent is if you’re really if there’s just a lot of deals out there right now there are a lot of deals and you’re trying to take advantage of those deals maybe you get down to a point where you only have about 10 percent of your money in cash okay that’s fine that’s like if you just see
Deal after deal in stock after stock and you’re ready to invest that’s fine and then up to a 30% is if you’re really not seeing any good deals out there if you’re just looking at stocks and you’re coming across company after company and like this one’s overvalued this one’s overvalued i can’t find any undervalued companies you and build it up you never want to be
Desperate to make an investment okay you never want to be desperate to make an investment when you are desperate to make an investment it’s like i don’t know you’re trying to get laid and you go to the club if you go to the club and you’re desperate you’re going to get desperate results okay they’re not going to be good results at all okay that is the exact same
Thing in the stock market you go into the stock market and you’re desperate to just try to invest money in whatever you’re going to get some desperate results guys and it is not going to be a good situation for you you do not do that okay now why do you want to always hold money in cash why do you want to always have some sideline money going on the real way the
Real reason you always want to have some sideline money is because there’s gonna be a lot of volatility okay and less than a month ago it was it was what the second week of february the markets were tanking okay the markets were tanking it was you know crash city em you stock em u21 you know a lot of you guys hold right now that’s those shares were about thirty
Nine dollars now about a month later those shares are around i think around fifty four dollars i could go through stock after stock that in the first herbs either the first or second week of february the markets were tanking across the board and stocks were insanely cheap okay you know just everything was falling think about if you were in a position where you
Could be buying stocks that during that week when everything was just you know crashing for whatever reason they would fabricated out there and you had thrown out there you wouldn’t be up massively hardy on the majority of positions out there okay cruz shares were trading around 37 now they’re around 12 enroll 43-44 eli another one of my holdings was around 14 now
That’s 16 something to share pretty much stock after stock we’d go through and say wow that one was a trading way down but if you were a hundred percent invested at that time you had nothing to buy for with this $39 drop here or any of the other stocks you would have wanted to buy if you’re a hundred percent invested you’re like chained up you’re chained up you got
Nothing to do you just have to watch those markets dip all your stocks go down and then that’s just a horrible feeling that has a horrible feeling guys you don’t want to be in that position you never want to be in the position where you’re just holding and you’ve got nothing to buy for and you’ve seen all these cheap prices on stock after stock after stock because
Of whatever little worry came out at that time which there will continue to be so much stuff that really has no real world implications i’ve seen it for a decade now guys where there’s just a lot of like you know a little mumbo jumbo out there oh there’s this happen oh this person we resigned from the white house all this irrelevant stuff it’s really irrelevant
Stuff and in terms of what it’s going to mean for actual real corporations as far as their profits going things like that when there’s something real that happens when something real with the gdp numbers that go south when the unemployment goes really really weak things like that that’s when you need to worry okay and that’s when you really need to be cash heavy
And ready to you know take advantage of put options take advantage of buying shares and the dip so that the huge dip set is and things like that that’s when you really need to be you know ready to invest at those particular times but all these little mumbo-jumbo things it happens all the time 2017 happen to be a very even keel year that is rare almost every single
Year i’ve ever been in the market several times during that the course of that year there was some type of worry oh my gosh we’re gonna have a double-dip recession oh my gosh china might get weak oh my gosh you know so-and-so might get elected so-and-so might not get elected whatever it was there’s always a million reasons and stocks will just dip and dip first
For whatever reason and you get these great opportunities to buy great corporations at a much cheaper price than you would have any other time and the question is do you are you going to ever be in a position where you can take advantage of that if you’re a hundred percent invested all the time you’re never ever in a position where when when stocks dip and they
Will dip from time to time you can take advantage of that but at the same time you don’t ever want to be to a point where you’re 0% invested cuz then you’re just missing out on all the gains obviously you never want to be 0% invested unless somehow you time the market perfectly when you’re like oh my gosh weird enough something happened in the market i’m gonna
Sell off everything right now and then we’re gonna go down and i’m gonna buy back like that’s pretty unrealistic guys always being a position where you are ready to buy when you see opportunities don’t ever get desperate to be like i need to invest all my money it’s just not the smartest way in my opinion as someone they used to do that back in the day i used to
Always like invest every dime i had and that was just what i did and that’s really not the way because then you don’t have money ready for all these huge dips and opportunities you have out there guys individual stocks you drop all the time sometimes for reasons that you don’t agree with okay sometimes you know they report earnings and the earnings are actually
Pretty good but you know the analysts didn’t like it or whatever or wall street didn’t like it and that stock drops huge well that is a huge opportunity for you to buy shares if you really love that company so much right but if you had already been fully invested in that stock what do you have to do you just have to hold those shares watch them go to a much lower
You know cost than what you paid for those shares and then you got nothing to stick in them even though you really loved that company that is not a position you want to be in guys so make sure you’re always trying to keep you know somewhere between ten to thirty percent depending on your financial situation and depending on you know how you know much you love stocks
At that particular time you know if you really just think there are so many deals and you can get down to this point but man don’t be desperate if you if you don’t see a lot of deals hold a hold a lot of cash man hold it a lot of cash because i could almost guarantee you there’s gonna be opportunities out there it’s gonna be dips it’s gonna be dips in particular
Stocks you were looking into is gonna be dips in the market in general and those that’s when you can really make a lot of money and get your cost basis is way lower than that you could have maybe a few weeks ago or a few months ago guys so that is why i personally you know adapt this way ohio generally always have 10% to 30% of our portfolio right now i probably
Have somewhere around i would say between 15 and 20 percent of my portfolio total is in cash right now somewhere around 15 to 20 percent and it will probably continue to be somewhere around there but that’s just me and that’s just kind of the way i’m approaching things right now if i see more good deals out there i might drop it to somewhere around a 10% rate if
You know we have the stocks just go up like crazy over the next you know let’s say six months or whatever i might get to a place where 30% of my portfolios in cash we shall just see guys but right now i’m about 15 and 20 percent so anyways hope you guys enjoyed this hope you learned a lot from it in anyways thank you for watching guys and have a great day
Transcribed from video
why you should be holding CASH By Financial Education