Fantastic question! Y’know what they say: cash is king.
First of all, cash can be an important option for your portfolio and overall financial plan, especially for shorter-term goals where saving cash may help you reach your goals more predictably than investing given the shorter time frame since the cash cannot lose value. All else equal, the higher the cash allocation, the safer the portfolio. Since cash is not invested, it does not experience market fluctuations.
With Managed Portfolios, there are several ways you can use cash:
- Save Cash milestones
- Milestones with a Stocks, Bonds, and Cash allocations
- The Wallet
The Save Cash milestone
This is one of the many types of milestones we offer. One unique aspect of the Save Cash milestone is that the funds are not invested. Instead, the funds always stay in cash.
This type of milestone can be especially helpful because:
- The cash will not lose value and can be especially useful for shorter-term goals
- There’s no limit on how many Save Cash milestones you can create, especially if you want to put cash away for different goals
- It may help with faster withdrawals since no securities will need to be liquidated
Check out or create a Save Cash milestone: Create Milestone
Milestones with Stocks, Bonds, and Cash allocations
All of our other milestone types (Rainy Day, Retirement, Build Wealth, New Home, New Vehicle, and Custom) can also hold cash.
If you’re creating a new milestone, you can choose to have the milestone be:
- Stocks and Bonds,
- Stocks, Bonds, and Cash, or
- All Cash. If you choose Stocks, Bonds, and Cash,
You’ll be able to choose and later update the percentage of the cash allocation.
If you have an existing milestone, you can also update this setting at any time:
- Select the milestone you’d like to update
- Click on the Edit tab
- Edit the Targets (which will include the allocation) or edit the Allocation directly
Your Wallet holds cash in order to power Formulas, a free feature that helps you automatically capture unique opportunities.
Similar to your milestones, you can do one-time deposits or set up an auto-deposit from your linked bank account into your Wallet. The funds then stay in cash while they’re in your Wallet and are used for formula transfers into your Milestones.
Here’s more information about Formulas and your Wallet: