148: How Much Cash Should You Hold?

Welcome to The Invested Dads Podcast, simplifying financial topics so that you can take action and make your financial situation better. Helping you to understand the current world of financial planning and investments, here are your hosts, Josh Robb and Austin Wilson.

Austin Wilson:
All right. Hey, hey, hey. Welcome back to The Invested Dads Podcast, a podcast where we take you on a journey to better your financial future. I am Austin Wilson, Research Analyst at Hixon Zuercher Capital Management, and I was just singing in the car on my way back here, so my voice is a little rough today. Vince Gill, he’s got very-

Josh Robb:
Belting it out or what?

Austin Wilson:
He’s got a very high-

Josh Robb:
How did you lose your voice over singing in the car?

Austin Wilson:
He’s got very high voice, so I was screaming in the car. So yes. And you are…

Josh Robb:
I am Josh Robb, Director of Wealth Management at Hixon Zuercher Capital Management. Austin how could people help us with our podcast?

Austin Wilson:
Well, we would love it if you would subscribe to Vince Gill on Apple Music.

Josh Robb:
Oh, okay.

Austin Wilson:
…No, actually subscribe to this podcast, if you’re not subscribed to it already. That way you get new episodes when they drop every single Thursday. And if you would love to get a special email, can join our email list by signing up on our website, and that would send you an email every Thursday when the episode comes out with a link to listen to it, as well as some show notes already talking about what we are going to be discussing. So today, we are going to be talking about something that I have mixed feelings on. You do too.

Josh Robb:
Yep.

[1:10] – We’re Talking Cash!

Austin Wilson:
And that is cash. Cash, cash, cash. Cash is king. Cash cow.

Josh Robb:
Money on my mind.

Austin Wilson:
Money on my mind.

Josh Robb:
And mind on my money.

Austin Wilson:
Yeah. Cash, Josh.

Josh Robb:
Yes. We’re talking about cash, and there’s three questions, Austin.

Austin Wilson:
Three.

Josh Robb:
What do you got?

Austin Wilson:
Well, is it a good idea to be holding cash right now with the volatility in the market?

Josh Robb:
Yep.

Austin Wilson:
Is there a such thing as too much cash? And if I did have cash, where am I going to put it?

[1:36] – Holding Cash During Market Volatility

Josh Robb:
Okay, so let start with the first one. All right? Is holding cash a good idea when markets are volatile?

Austin Wilson:
It depends.

Josh Robb:
You love that answer. Somebody must have taught that to you.

Austin Wilson:
I know, wise guy.

Josh Robb:
So the answer is yes. If markets are on their way down, stock markets, bonds, doesn’t matter.

Austin Wilson:
They’re all down now.

Josh Robb:
Investible assets. Holding cash avoids that because cash is… If I have a dollar bill, the dollar bill is still a dollar bill. When I look at it, the 1 doesn’t change to anything else.

Austin Wilson:
Even though it only buys 88 cents or 90 cents worth?

Josh Robb:
Well, we’re going to get there. Yeah. We’re going to get there. But ideally, if you knew exactly the top of the market, you go to cash. The bottom of the market, you go back in, and you avoid that in between draw down. I mean that’s huge. That’s investing right there. But no one knows that. And no one can do that perfectly.

Austin Wilson:
And if someone says they can, run. Don’t listen to them.

Josh Robb:
Maybe they can periodically get it right or get it close. But over the long run, historically speaking, that actually hurts performance instead of enhances it by trying to get in and out to avoid volatility. So, to answer your question, should you have cash during market volatility? The answer is yes.

Now, we’re going to get to your other question is how much cash? But the first thing is, well, there’s different types of cash, and we’ve talked about this. So, we’re going to link it in our show notes, but an emergency fund, which is in some form or another cash because you need it available in an emergency. So, you do not want that in the stock market where in a year like this, 20% of your emergency fund would’ve disappeared. That’s not good. You need those type of things in cash. So, should you have cash? Yeah, you should. You should always have cash.

Austin Wilson:
Again, we’re going to get to this later, but that might not be physical hundred dollars bills.

Josh Robb:
Right. Yeah. So that is cash. So, do people need cash? Yes. They need some form of cash.

Austin Wilson:
Liquid assets not declining in value.

Josh Robb:
Yes. You need what? Three to six months of living expense. That’s what the normal kind of emergency fund is. Now, there’s always caveats. Listen to our show on that. We talked through that quite a bit. But high level, if you’re experiencing higher than normal demands on your cash flow, so maybe there’s a wedding coming up or a college cost, home purchase, maybe you’re getting ready for retirement. There may be a reason to have more cash, and we’ll talk about that in a little bit. But in general, three to six months is kind of the normal emergency fund. That should always be cash, and that cash should be available in some way or another. But holding cash above and beyond that can and will hinder your long-term performance.

Austin Wilson:
Well, Josh, why is that?

Josh Robb:
Because cash does not grow.

Austin Wilson:
No, it really doesn’t.

Josh Robb:
You have interest.

Austin Wilson:
Yeah.

Josh Robb:
And this is the big thing. You alluded to this. It historically has not grown at the same rate that inflation is. Inflation is the cost of all your goods going up. So inflation, we’re talking about it because we have higher inflation right now.

Austin Wilson:
It’s very high right now.

Josh Robb:
Inflation is not a bad thing.

Austin Wilson:
No.

Josh Robb:
Inflation is a normal byproduct of a growing economy.

Austin Wilson:
So some inflation is good.

Josh Robb:
Right. And it’s actually inevitable. I mean, you will have inflation if your economy is growing. So if here in the United States, our United States as a whole grows, and we use the GDP for that, gross domestic product. That’s a way of measuring the growth. But if we’re growing as a nation, in general that means that as things get bigger, there’s more demand, supply and demand, prices change. That’s normal. Inflation’s just describing that adjustment over time.

Austin Wilson:
Yeah. And a normal inflation range is similar to a normal economic growth size. So 2% to 3% over a long period.

Josh Robb:
Yep. Two, three, four.

Austin Wilson:
But definitely not eight or nine like we’re seeing right now.

Josh Robb:
The long-term average is about 3.5% if you look for the United States. And so, like you said, that’s it. Now, if you look historically about cash, cash does not grow three and a half percent on average.

Austin Wilson:
No.

Josh Robb:
Especially we’re talking extremely liquid variation of cash. What that means is the more you hold cash or the more cash you hold, the less you’re keeping up with that inflation, which means the less your money will be able to purchase in future years. That’s called purchasing power. That’s the term for that, meaning how much can I get for my dollar now? How much will I get for my dollar in the future? And you want that purchasing power to stay at a hundred percent, meaning I can buy the same amount in future that I can today.

Austin Wilson:
It sounds like that. Yes. But the reality is that’s unlikely to happen.

Josh Robb:
Well, the goal is to have your purchasing power keep up with inflation.

Austin Wilson:
Yes. And that’s why we’re going to talk about what to do with your money.

Josh Robb:
And cash does not, unfortunately.

Austin Wilson:
Cash does not.

Josh Robb:
Yeah. So, you may say, “Well, I had a thousand dollars in the bank at the start of this year, and I avoided all this market. I still have a thousand dollars in my bank.” Well, if we have 8% inflation, your $1,000 still does not buy $1,000 worth of stuff.

Austin Wilson:
That’s right.

Josh Robb:
And so that’s the loss that you don’t see, but you experience. So that’s the first piece. Now, I mentioned if you could time it, that’d be great. And I also mentioned it’s really hard to do.

[6:10] – Holding Cash When You Should Hold Stock

Josh Robb:
Tony Hixon here at our firm, and we had him on talking about his book a while back. Check out that podcast. But he wrote a blog, and it just came out on the 30th.

Austin Wilson:
Of September.

Josh Robb:
Yes. Check it out. But in there he talks about missing out on the market during downturns.

Austin Wilson:
Yeah. So this is an example of if you were to be holding cash when you should be holding stocks, and you’re missing out on specifically the best days in the market, right? What’s interesting to talk about first is that the best days usually happen around the worst days of a market, so in the midst of a market sell off, as we’ve experienced in 2022, we’ve had some pretty darn good days in the middle of all this. You may be down 4% one day, but you might be up 3% in the next. And that’s a really strong day overall. So missing the up days is actually a very, very poor thing to do. So the statistics that he talked about in this blog is, first of all, this is crazy. We have had over 17,500 trading days since 1950.

Josh Robb:
That’s a lot of ticker tape.

Austin Wilson:
That’s a lot of ticker tape. So if you miss out on just the 10 best days, that’s unfortunate. We’re going to talk about some statistics around that. An investor who invested $10,000 in the S&P 500 in 1950 would’ve gained 7.9% annualized, and this portfolio would be worth 2.3 million today. That’s pretty good, right?

Josh Robb:
Yeah. Seems good.

Austin Wilson:
That’s if they remained fully invested. Now, if you missed out the 10 best days, so take out 10 days off of that 17,500. That’s not that many, right?

Josh Robb:
No. 70,490 trading days.

Austin Wilson:
Yeah. Your annualized return would go down to 6.7%, and your ending portfolio value would be 1.1 million. So less than half.

Josh Robb:
Half of your-

Austin Wilson:
For 10 days.

Josh Robb:
… Ending value.

Austin Wilson:
Yeah. Over 10 days. So, you missed 15 days. Take out five more. Down to a 6.2% annualized return, just $800,000. What does that mean? That means in your investment portfolio, aside from looking at overall asset allocation with your financial advisor, in that case for certain needs, cash can be useful. But when you’re talking about specifically stocks, not holding stocks that you need in the long term right now is going to be very, very painful for you if you miss those updates. That’s why especially right now when things are down 25 more percent, selling when things are down and going to cash, it’s not going to help you.

Josh Robb:
No.

Austin Wilson:
In fact, you have more of a risk of missing some of those good up days than you do long-term missing some of the down. So, hold is kind of the key there.

Josh Robb:
That’s true.

Austin Wilson:
So Josh.

Josh Robb:
Yes.

[8:40] – Dad Joke of the Week

Austin Wilson:
I have a couple dad jokes for you.

Josh Robb:
Oh boy. Couple?

Austin Wilson:
Dad jokes of the week. And you’re going to pick up on a theme here. You’re going to know exactly what that theme is. What is brown and has a head and tail, but no legs?

Josh Robb:
Ooh, a dirty coin.

Austin Wilson:
Yeah, a penny.

Josh Robb:
Oh good.

Austin Wilson:
Yeah. Good, good, good. When does it rain money?

Josh Robb:
Ooh, I don’t know.

Austin Wilson:
When there’s change in the weather.

Josh Robb:
Change in the weather. I like that one.

Austin Wilson:
Oh, that’s funny. Where does a penguin keep its money?

Josh Robb:
Oh, I don’t know where.

Austin Wilson:
The snowbanks.

Josh Robb:
Snowbank.

Austin Wilson:
Yep. Classic. How do dinosaurs pay their bills?

Josh Robb:
Ooh, how do they?

Austin Wilson:
With Tyrannosaurus checks.

Josh Robb:
Checks. Who writes a check nowadays?

Austin Wilson:
And where can you always find money?

Josh Robb:
The riverbank?

Austin Wilson:
Ah, that’s a good one. I was going to say in the dictionary.

Josh Robb:
Oh yeah, that’s true.

Austin Wilson:
Yeah?

Josh Robb:
Yeah.

Austin Wilson:
So those are some pretty good-

Josh Robb:
Money’s always in it. Yeah.

Austin Wilson:
What’s the theme? Money.

Josh Robb:
Money.

Austin Wilson:
Cash.

Josh Robb:
Cash.

Austin Wilson:
Yeah.

Josh Robb:
I like it.

Austin Wilson:
So anyway, those are some dad jokes, multiple of the week. So the question, number two-

Josh Robb:
The first question was, is holding cash a good idea when market’s volatile? The answer is yes, it’s a good idea.

Austin Wilson:
If you can time it.

Josh Robb:
But the caveat is no one can successfully do that, so then the answer becomes no because the risk of missing those good up days to recover the days that you were down are needed or else you’re going to have a long term reduction in performance.

[10:06] – How Much Cash Is Too Much Cash?

Austin Wilson:
Right. Yeah. I guess my general advice about that would be if you have a need for any cash, have it in cash in the short term, within a couple years. Aside from that, don’t worry about the day-to-day volatility of your portfolio. Next question is, is there such a thing as too much cash? Ooh, I like that one. So, Josh.

Josh Robb:
So we kind of hit on this. The short answer is yes, because if you have too much cash, not enough of your portfolio is going to be beating inflation, right? If you see your portfolio drop, your cash stays the same, but that purchasing power goes away. And we kind of hit on that. Now, we do something where seasonally, based on where you’re at in your life, sometimes more cash is needed. The question is, is there such a thing as too much cash? Really depends on what’s going on in your life. If you are a 20 something person who is in a stable job and isn’t planning on any major purchases, not a lot of cash is needed.

Austin Wilson:
Right.

Josh Robb:
For three to six months, happy, call it a day. If you’re a 65-year-old who’s right about to retire, ideally a little more cash is helpful because of these volatility things. So, one of the things we do is we do what we call a bear market fund. And so, we create a fund where about two to three years of your living expenses, not your income, but your living expenses are put in a very conservative investment. Could be cash, could be fixed income, could be a combination of stuff, something that is trying to avoid the stock market volatility. And that is there so that as you transition from working in an income to drawing off your portfolio, this allows you to utilize the benefit of that timing. Because again, you don’t know how to perfectly time it, but if we say two to three years, that should give us enough of a cushion to avoid any major volatility.

Austin Wilson:
Yep.

Josh Robb:
That allows you a little more peace of mind as you enter retirement. And so, we actually did some research and two to three years ends up being kind of the most optimal timeframe. Anything more than that, you actually do start hurting your long-term success of your retirement plan because too much of it is in cash, too much of it is missing out on the opportunity to beat inflation. And so that’s just something to think about is, is there such a thing as too much cash? Yes. And that answer becomes when it’s more than what you’re going to need for your short term, and it’s starting to impact your long-term results of your investments.

Austin Wilson:
Another explanation of that two-to-three-year window is historically speaking, that is the time that it has taken to recover from equity bear markets. If you are primarily invested in stock, which is what we would say you should be to grow over time, you don’t necessarily want to be pulling when stocks are down, pulling cash out. So if you then at a certain point, when you work with your advisor to set it up, you start pulling from a more liquid bear market fund sort of idea. When stocks are down, we’ll keep pulling out of that fund until the equity markets are back up, and then you can start taking off of those again. When equity market’s back up, you can start refilling your bear market fund, and then you just kind of keep working in that cycle. So you’re not really draining your stocks when they’re beat up.

Josh Robb:
Yep and actually historically, if we’re just talking retirement, after that first draw down, it’s even less needed, a bear market fund, for the success of your retirement plan. It’s that early risk of volatility that we’re most preparing for. But a lot of them will refill because it is a nice piece of mind to say, ‘Hey, I don’t have to touch my portfolio if it’s down. I have money sitting, operating to go.” So, is there such a thing as too much cash, Austin? Yes, there is.

Austin Wilson:
Yes.

Josh Robb:
And there’s not a number, and there’s not a percent.

Austin Wilson:
It’s different for everyone.

Josh Robb:
I like where we have an emergency fund where we can say three to six months. There’s kind of a value you can assign to it. That too much cash question really comes down to where you’re at. Another example is, “Hey, you know what? I’m renting, but I think I’m going to buy a home in the next couple of years.” Well, extra cash is fine because you’re going to have a down payment. You’re going to have some moving expenses. You’re going to have all that stuff you’re going to do. Yeah, accumulating excess cash, that’s for a purpose and for a reason. There’s nothing wrong with that.

Austin Wilson:
The stock market would be a very risky place for something like that.

Josh Robb:
Yes. We always say less than three years of needs. The stock market is not the place to park that money.

[14:06] – Where Should I Keep My Cash?

Austin Wilson:
Absolutely. So the next question, Josh. Third and final, number three. Where should I keep my cash? And we joked about this earlier because I said, “Oh yeah, in a bag in the backyard underground.” But no really, where should you keep your cash?

Josh Robb:
Yeah, so depending on the need depends on your accessibility. So emergency fund, like I talked about, it needs liquidity, meaning it’s liquid. That term means quickly accessible. I’m able to get at it right away with little to no consequence, and I can access and use it as the need arises. So for emergency funds, you need it very liquid. You need something, high yield savings account, regular savings account.

Austin Wilson:
Yep.

Josh Robb:
Somewhere where you can get at it at the expense of interest because the more liquidity, the less interest you’re going to get. There’s money market accounts too. I mean, those are all the same in a sense that they’re all liquid, ready to go. If I have a little more time, so I have cash, probably next two to three years going to buy a home, so I don’t need it right away. And there’s a little flexibility there. You could look a little bit more of interest bearing and a little less liquid. So, something like CDs, treasuries, some sort of laddered approach. And when I talk about a laddered approach, that means if you think of a ladder, there’s steps or rungs along the way. I’ll take CDs as an example. I may buy a six-month CD, and since it’s a shorter timeframe, I’m going to get a little less interest. And I’ll buy a one-year CD, and then I might buy an 18-month CD. So, I laddered the times that these mature, but every six months one of those is going to mature. And then as that six months matures, I buy another 18 month, which is a higher interest rate.

Austin Wilson:
Mmhmm.

Josh Robb:
And as the 12 year matures, I buy another 18 month. And so I’m constantly buying 18 month CDs, which are a higher interest rate, but every six months I have a third of that accessible.

Austin Wilson:
Yep.

Josh Robb:
That’s an option for it. You could do it every month. You could ladder it monthly where you’re buying out, and so every month 1/12th of it is available. And you’re buying out a year’s worth, however you want to ladder it. The idea is a portion is liquid at a set timeframe, but you’re getting a higher interest rate because you’re buying longer term back end of that ladder.

Austin Wilson:
Yeah.

Josh Robb:
That works for any type of product that has a timeframe to it. So that’s an option. But again, what you’re giving up is the liquidity of that other piece is not as available throughout that timeframe. But if you know, again, this is not your emergency fund. This is just money for whatever reason you need, and you don’t want it in the market with that volatility. That’s a great way to get a little extra yield. And if you look at a two-year treasury is what? 4% right now. It’s half of inflation, but I mean, at least it’s something, right? So you could get a little bit of interest off these things if you’re laddering those things out, which is actually counterintuitive to my ladder because right now we have an inverse.

Austin Wilson:
We have an inverted yield curve.

Josh Robb:
Yes. And so actually, the farther out you buy, you’re actually getting less, so you just buy a bunch of two years or whatever.

Austin Wilson:
Under normal market circumstances, Josh, that works out quite well.

Josh Robb:
So actually what I would do in that case, if someone was really adamant about it, I would buy two years but every month. So, you’re still getting the highest interest rate and laddering the liquidity of it, but still locking in the highest interest rate. But anyway, that’s a whole nother thing. Now, if you have a little more flexibility, and we’ve talked about this in the past about I bonds. So an I bond is a government security that is tracking the inflation number, and they pay interest that matches and it adjusts every six months. And so currently it’s like at 9%. And so it’s actually keeping up with inflation. That’s the whole point of this thing.

Austin Wilson:
And you buy it at par. You’re buying them at market prices. Well, you’re buying an I bond at par, which means you can’t lose money on an I bond.

Josh Robb:
Right. You buy it. You’ll collect whatever interest, and then when you sell it, you’re done. Now, there’s some caveats to that. We’ve talked about in the past, but the first year cannot sell it.

Austin Wilson:
Not at all.

Josh Robb:
So there’s no liquidity in the first 12 months. So, if you’re putting any kind of cash in there, you got to understand that, is I cannot get this back out even if I really, really, really, really need it. And then the second one is for a period of time after that, if you do sell it, you give up a portion of that interest back as a penalty for selling it early. But again, if you’re looking at interest, that’s one of the highest yielding things out there, but there’s some caveats to it.

Austin Wilson:
Yeah. And I think you can only buy $15,000 a year per person.

Josh Robb:
Yeah. It’s 10 plus an extra… Yeah. You can add a little extra from your tax refund too, which is always fun.

Austin Wilson:
Yeah. I think that might be…

Josh Robb:
Now, there are businesses and corporations, you can do it structured different ways, and I’m not getting into all that.

Austin Wilson:
And you have to do it through TreasuryDirect.

Josh Robb:
You have to buy it directly through them. But again, if we’re just talking about what you could do with your cash, if you want to give a little liquidity, that’s another option there.

Austin Wilson:
Yeah, for sure.

[18:36] – Cash Recap

Josh Robb:
So first question was where are we going with this? Is there volatility coming up? Should we hold more cash? And the answer was no. Because we don’t know when the good days are going to be versus the bad days. And how much is too much cash? Well, any bit more than you’re going to need for your emergency. If you’re a young person, anything more than you’re going to need for emergency and any upcoming expenses, that’s too much cash. And then where do I keep it? I keep it as close as I need it but earning as much as I can. And so, I encourage you to shop around, see what is out there if you’re looking for yields.

[19:08] – Austin’s Thoughts on Cash

Josh Robb:
But Austin, what are your thoughts on cash?

Austin Wilson:
Well, you asked me this in a very challenging environment.

Josh Robb:
I did. I did.

Austin Wilson:
So the markets in 2022 as I live and breathe this stuff, it’s been rough. Stocks are down 20 something percent. Bonds are down 15%. Worst year of a 60/40 portfolio in history. So it’s got me a little bit less anti-cash than I usually would be in this instance, especially for clients nearing or early in retirement. I can totally understand the way that they feel, and I can totally understand thoughts on having cash at hand, which is why I think our bear market fund thinking is very, very important. I think again, have the cash to meet the needs that you’re going to be needing. And if you’re a young person, I don’t think this volatility should scare you. It’s certainly not fun. Don’t think that cash is the answer aside from your emergency fund because over the long term, this is the time to be using cash and putting it to work in the market.

Josh Robb:
And that’s the one thing we didn’t talk about, and I wanted to get your thoughts on that. I hear people talk about having dry powder, having excess cash ready to be put in. And having done this for a handful of years, I’ve seen more often that they wait a long time for that opportunity and end up, if they would’ve just invested it been better off. And so I wanted to get your thoughts on dry powder or excess cash ready to go and waiting for that opportunity.

Austin Wilson:
I think that it is rare that the opportunity works out well enough that you have a clear indicator to acquire some cash through whatever. If that’s selling at the top, buying the bonds. It’s very rare that happens the way that it should. So, holding on to cash over the long term and waiting for a big pullback, sometimes never happens. So that would be you trying to time the market, very hard to do. Professionals don’t do it well. So, what I would say is your best answer is not to try and do that. Not to try to have too much dry powder. I would say dollar cost average is what I would say.

And if you’re dollar cost averaging, you still have a little cash on the side and you get a big dip, it’s okay to pull some ahead, put a little extra in. But if you just keep sticking at it monthly or quarterly or whatever, weekly, whatever that looks like for you, you won’t have to worry about keeping dry powder. You’re not going to try and time it, and you’re going to get some excellent purchase prices over time. So, I think that more people have missed out on equity market rallies holding dry powder than have made money buying dips. That’s what I would say.

Josh Robb:
Yep, okay.

Austin Wilson:
And then I guess as another just kind of thought on cash is, personally speaking, one of my favorite tools right now because I like liquidity and I like yield, is the high yield online only savings account. There’s a lot of options out there, but right now those things are yielding north of 2%. So you get 2%, and you can access your money whenever you want. That’s my favorite thing right now. So that’s what I use for my own personal emergency fund and stuff. Even at a brokerage firm or whatever, or a fidelity custodian…

Josh Robb:
1.8, something around there.

Austin Wilson:
You can get almost two on just holding cash in those accounts as well. So those are very liquid ways to have cash. I like the liquidity options a little bit more than laddering out CDs.

Josh Robb:
Yeah, it’s a lot of work too.

Austin Wilson:
It is.

Josh Robb:
When they return, you got to reinvest them.

[22:24] – Josh’s Thoughts on Cash

Austin Wilson:
What are your thoughts on cash, Josh?

Josh Robb:
So I agree with you on a lot of what you said. I think the only time where I see that dry powder becoming an option is if we are in the early stages of a draw down, and you’re seeing those signs of kind of deterioration. So if you look at the beginning of this year, when we had the start of the conflict with the Russia, Ukraine, we had the inflation been working its way up since September of last year. You could look at someone who maybe just sold their business and say, “Let’s be a little more cautious about going all in.” So I see that as an opportunistic approach. It’s not my default to say, “Hey, we’ve had two really good years in the stock market, let’s hold the cash until we get a drop.”

Josh Robb:
Because what we saw coming out of ’08, ’09 is we had a lot more than two years.

Austin Wilson:
There were a lot of really good years.

Josh Robb:
Before you got your cash in, you missed out on the growth. And so I agree with you that in most cases, dollar cost averaging is the best way to spread that out either way. But if you’re seeing the downturn, what you can do at that point is you can go with dollar cost averaging down because you’re going to then be buying in on that downturn. Or you could say, “You know what? Here’s my point, and if it goes lower, then we’ll look at getting in. But I’ll at least get back in at this point, which is what I would invest in anyways.” And so, if you’re seeing this volatility, you can do some little kind of nuanced things. But in general, in a normal market cycle where you’re just kind of have no clue what’s coming because that’s normally what it’s like, you could just say, “Hey, we know long term, getting it all in is actually a great choice because the market’s up three out of every four years.”

Josh Robb:
But if you’re uncomfortable, average it in. Everybody will be happy. But in general, like you said, with this volatility and with life happening, I’ve more and more favor of having the higher end of the emergency fund with four kids, with the possibility of any one of them hurting themselves at any given time and medical bills and me hurting myself at any given time.

Austin Wilson:
No, that’s giving more of a realism.

Josh Robb:
That’s probably more likely that it happens. That I just see sometimes cash gives you flexibility. It doesn’t force you to make a decision in other investment accounts that you may not want to make. But I’m in the same boat as you as a high yield savings account, money market account, somewhere where you’re getting something for parking the money, and then just being aware of opportunities. There may be a chance where you have excess and then if you don’t need it, get it back to working it. If you do need it, then utilize it.

Austin Wilson:
Absolutely. Well, thank you for listening. Hopefully you learn a little bit something about cash because some people have very strong opinions on both sides of it. And hopefully we were able to give you some of our thoughts on that. So, if you had someone asking about cash, please share this episode with them.

Josh Robb:
Or if you have someone that has extra cash, let us know.

Austin Wilson:
Let us know. Exactly. Otherwise, we’d love it if you’d subscribe and leave us a review on Apple Podcast or wherever you are listening to us. Until next Thursday, have a great week.

Josh Robb:
All right, talk to you later. Bye.

Thank you for listening to The Invested Dads Podcast. This episode has ended, but your journey towards a better financial future doesn’t have to. Head over to theinvesteddads.com to access all the links and resources mentioned in today’s show. If you enjoyed this episode and we had a positive impact on your life, leave us a review. Click subscribe and don’t miss the next episode. Josh Robb and Austin Wilson work for Hixon Zuercher Capital Management. All opinions expressed by Josh, Austin, or any podcast guest are solely their own opinions and do not reflect the opinions of Hixon Zuercher Capital Management.

This podcast is for informational purposes only and should not be relied upon for investment decisions. Clients of Hixon Zuercher Capital Management may maintain positions in the securities discussed in this podcast. There is no guarantee that the statements, opinions, or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. Securities investing involves risk, including the potential for loss of principle. There is no assurance that any investment plan or strategy will be successful.