How Much Cash Should You Have on Hand?

Famed investor Warren Buffett likens cash to oxygen—never thought about when present but the only thing on your mind when it’s absent. In spite of the vital role cash plays in a portfolio, many downplay its importance because they want to help maximize their assets’ earning potential. While liquid assets have a low return, a well-balanced portfolio takes liquidity into account.

We aren’t suggesting you start hiding hundred dollar bills under your mattress, for several reasons, but having cash in an FDIC-insured checking or savings account is crucial. Although, even if you know you need cash on hand, you might question how much.

How do you determine a reasonable number?

Though the amount varies based on your unique needs and goals, there are a few points to consider. For a number that is completely customized to your portfolio, reach out to your financial advisor to review your assets and decide what makes sense for you.

In this article, we’ll cover why it’s essential to keep cash in your portfolio and how much cash you should have on hand. Let’s take a look.

The Role of Cash in Your Portfolio

Why does a well-balanced portfolio account for liquidity? Here are a few of the main reasons:

Taking advantage of possible opportunities.

With cash on hand, you’re able to move quickly with investment opportunities. If a stock you’ve had your eye on drops to a price you can’t pass up, for example, liquidity allows you to make your purchase before you miss your chance.

Having a well-balanced portfolio.

Depending on your risk tolerance, you may be more inclined to put less focus on cash because you want the maximum return possible. As enticing as that may be, cash adds stability to your portfolio that you will appreciate when the market hands you a loss. Even a small percentage of cash can lower your risk to a more manageable level while still seeing substantial progress.

Feeling confident with market fluctuations.

Cash can be comforting. When you know you have enough to sustain your expenses through rough market periods, you can make financial decisions with logic instead of emotion. Without cash, a severe drop in the market can lead to panic and stress, pushing you toward unwise choices. Feeling confident in your position helps you stay strong through volatility so that you can benefit from future gains.

How Much Cash Do You [Really] Need?

We didn’t lead you all the way here to be left empty-handed. We’re sorry to say, though, that the amount of cash in your portfolio depends on a few factors. Your age, goals, risk tolerance, and amount of assets all work together to help your financial advisor identify an appropriate amount. Advisors suggest anywhere from 5% to 30%, which is a significant difference, but it gives you an idea of what you’re working toward.

Tip: Keep in mind that a good financial goal is to have enough liquidity to pay your expenses for six months. Having this amount saved in an emergency fund helps to protect you from selling your assets as a result of unexpected circumstances.

Get in Touch with Your Financial Advisor

 The appropriate amount of cash to have on hand is different for everyone. It will even be different for your own portfolio from year to year as your financial situation changes. Consult a financial advisor to make a well-informed decision about your portfolio’s liquidity. An advisor acts as your ally, mapping your financial goals and empowering you to reach them.

Our team of advisors specializes in portfolio diversity. We work with clients to help deliver maximum returns and confidence. Contact SageSpring Wealth Partners to schedule a consultation with an advisor near you.

alor1348 jeff
Jeffrey T. Dobyns


President, SageSpring | Financial Advisor, RJFS 

Jeffrey T. Dobyns

President, SageSpring | Financial Advisor, RJFS

Beyond crunching numbers and investment strategies, at SageSpring, we’re about building relationships. When you encounter Founder & President of SageSpring, Jeff Dobyns, it’s easy to understand why this is at the very heart of who we are as a firm. You won’t find stuffy formalities with Jeff; instead, you can expect to find him sharing a warm smile, communicating a compelling vision, or patiently untangling life’s complex challenges with clients. He believes in truly getting to know clients, understanding their aspirations and priorities, and navigating their financial plans with a tailored, comprehensive approach. Our team members have often been caught taking notes on Jeff’s effortless relationship skills from a distance, and we admire them for striving to learn from one of the best. 

Jeff’s financial expertise and wisdom are the perfect match to his innate people skills. Jeff holds the prestigious CERTIFIED FINANCIAL PLANNERTM certification, Chartered Life Underwriter (CLU®), and Chartered Financial Consultant (ChLU®) designations, and has held executive positions with financial planning firms for more than two decades. 

His dedication extends beyond the office to the boardroom and the local community, where Jeff is passionate about giving back. He serves as Chairman of the Board of Men of Valor, a prison ministry and mentoring program. Jeff also serves on the board of Send Musicians to Prison, which shares hope, healing and restoration with the imprisoned through musicians & artists. Jeff actively supports other initiatives in the community by sitting on the board of The Signatry of Middle Tennessee and the Halftime Institute of Nashville. 

Witnessing his four children, Gracyn, Hunter, Tanner, and Logan, excel on the field is almost just as rewarding, if not more, than celebrating the victories of seeing his clients overcome obstacles and build wealth. Spending weekends boating on the lake, hiking mountain trails, and fishing with his family are the moments Jeff cherishes most. It’s this grounded perspective that reveals the true meaning of wealth for Jeff: not just numbers on a page, but the freedom to create experiences that enrich your life and the lives of those you love. When you choose the Dobyns McMillin Wealth Team, you choose more than financial expertise. You choose a partner who champions your dreams, celebrates your victories, and walks besides you on the path to achieving your unique goals.

**Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER TM, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.