In today’s ultra-low interest rate environment, investors are temped to consider cash a useless assets as part of a portfolio. Nothing could be further from the truth.
The heyday of cash was in 1981 when cash, in money market funds, returned 15.58%. The low point for cash is now. The point about cash is that although it earns virtually zero at this point, its value will not decline and it provides the powder to enable the smart investor to take advantage of the next great buying opportunity. Cash should always be one of the asset classes in a well diversified portfolio.