Our August 1st article comes from the Wall Street Journal. The author discusses the importance of having a large cash reserve in order to sustain your current lifestyle through a period of market duress.
Regards,
Sam
Do You Have a Big Enough Cash Buffer?MANISHA THAKOR
Listen to the news these days and you will be assaulted by a cornucopia of worries–from acts of international aggression to domestic policy dilemmas. When it comes to your personal portfolio however, the concern you should have is much closer to home: “It’s Dow 17000–do you know where your cash buffer is?”
It would be nice if there were a soothsayer who could tell us exactly when this lovely post-2009 run upward in the market will end. Alas, history shows us that time and again the “trigger” for market corrections tends to be something that comes out of left field and wasn’t even a faint piece of graffiti on our collective wall of worry.
So concern yourself instead with something that actually matters and which you can control. This would be your ability to sustain your current lifestyle through a period of market duress that could last anywhere from a few months to a few years. How do you do this? By knowing where your cash buffer is.
Take a close look at what funds in your investment portfolio you might need to access over the coming years to maintain your current standard of living and discharge any large upcoming obligations such as college tuition or a home down payment. Those funds are not ones you want to have in equities right now. Depending upon your risk profile and view of interest rates, a money-market fund, certificate of deposit, or very short-term, low-cost bond index fund would be my preferred buffer zone.
Investing is a long-term activity. Your concern now is using a cash buffer to enable you to keep your remaining investment holdings in the market to benefit over the long run from the ever-undulating waves that are the markets move forward.
Important disclosures can be found at www.ansoncap.com/emaildisclosures This message is confidential and sent by Anson Capital, Inc. solely for use by the intended recipient. If you are not the intended recipient, you are hereby notified that any use, distribution or copying of this communication is strictly prohibited. This communication should not be deemed as an offer or solicitation to buy or sell any product. Any 3rd party information contained herein was prepared by sources deemed to be reliable, but is not guaranteed. All electronic communications sent or received are stored and may be subject to review by regulatory authorities or others with a legal right to do so. All communications containing sensitive material should not be sent via e-mail as Anson Capital, Inc. cannot guarantee the security of email transmissions. All communications requiring immediate attention or action by the adviser should not be sent via e-mail, since they may not be acted upon in a timely manner. Anson Capital, Inc. only transacts business in states where it is properly registered or notice filed, or excluded or exempted from registration requirements. Information included in this e-mail is not an offer to buy or sell, or a solicitation of any offer to buy or sell the securities mentioned herein. All investments have the potential for profit or loss and past performance does not guarantee future success. Anson Capital, Inc. does not guarantee specific results or imply that specific actions will always reach the desired goal. Anson Capital, Inc. has taken precautions to screen this message for viruses, but we cannot guarantee that it is virus free nor are we responsible for any damage that may be caused by this message.
To view our full privacy policy, please go to http://www.ansoncap.com/disclosure.html To unsubscribe to any future emails from Anson Capital, Inc., please reply to this email with UNSUBSCRIBE in the subject field
