Short and Long-Term Cash Investing Strategies

By October 26th, 2021 No Comments

So, you’ve got some extra cash, and you want to leverage it in a way that can support you in growing, protecting, giving, and living your wealth to the fullest. 

What can you do? 

Do you save or invest? If you save it, where should it go? 

This post will offer an overview of ways to leverage your cash. For more information and tips, download our ebook here.

Storing Near-Term Cash

If COVID taught us only one thing, it’s to be prepared for anything. Therefore, it’s important to keep a comfortable level of cash in an easily accessible place for daily living and emergencies. The standard suggestion is to have 3 to 6 month’s worth of cash on hand in a safe and liquid account. 

The types of accounts that work well for this could be:

  • An FDIC-Insured Checking Account
  • An FDIC-Insured Savings Account
  • Money Market Funds
  • Prime and Municipal Money Markets
  • Sweep Vehicles

Not all of these accounts are entirely risk-free. So, it’s important to do your research or talk with a wealth advisor before making any moves. 

Storing Longer-Term Cash Holdings

For longer-term cash holdings, consider the potential loss of purchasing power by leaving cash uninvested or in low-yielding depository accounts. Consider that at just a 1% inflation rate, $1Million cash left uninvested will lose $50,000 of purchasing power over just five years. We have two alternatives worth highlighting: 

  1. Short-Term Income Portfolio: SignatureFD offers a cash investment program called Short-Term Income Portfolio, which is designed with the goal of allowing investors to protect the value of these assets in short-duration fixed-income investments. 
  2. Multi-Year Guaranteed Annuity (MYGA): For investors close to retirement or retired, a MYGA provides higher yields relative to daily cash alternatives and allows investors to defer the tax on the portfolio’s income. 

Cash Investing

One main question we get from investors is whether they should have any cash at all. Most people are surprised to know that we believe owning cash or cash-like instruments is important to a holistic wealth portfolio. But, there are strategies to consider, including lump-sum investing, investing a fixed amount over time (what’s called Dollar Cost Averaging), or leveraging a cash allocation to help protect growth in your portfolio. The important thing to know is that every situation is unique and there are a variety of ways that cash can work for you. It’s important that you seek counsel from a wealth advisor to pick the strategies that would work best for you.

We dive deeper into the best strategies in our ebook, To Invest or Not to Invest, so be sure to download your free copy below. Before making any changes to your portfolio, speak to a wealth management professional. We’re here to help.


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