WHEN IT COMES TO FINANCIAL SECURITY, it’s comforting to know that you have adequate cash reserves to tap when you need them. But there’s also a downside to stockpiling cash: It can drag down your portfolio’s returns and cause you to fall behind financially over the long haul.
If you’re like many Americans, you’re probably sitting on a larger pile of cash than normal after spending less during the pandemic and depositing government stimulus checks. Or maybe you trimmed your stock exposure during last year’s bear market and never got back in. The U.S. personal savings rate (the percent of disposable income people save) was 27.6% in March. That’s below the record 33.7% savings rate in April 2020, but it is nearly four times the pre-pandemic rate of 7.3%, according to financial services firm UBS. Nearly $17 trillion was held in money market funds, bank savings accounts and small CDs in January, up 24% from the start of 2020, according to Crane Data.
Economic research firm Moody’s Analytics estimates that U.S. households had $2.3 trillion in “excess savings” at the end of the first quarter. This excess savings is on top of what households would have saved if the pandemic had not occurred and their saving behavior had been the same as in 2019. Some investors have been reluctant to funnel their spare cash into assets such as stocks that have historically delivered bigger returns over time. U.S. investors had an “elevated” 19% of their portfolios in cash in April despite an improving economy and rising stock prices, a UBS survey found.
Diese Geschichte stammt aus der July 2021-Ausgabe von Kiplinger's Personal Finance.
Starten Sie Ihre 7-tägige kostenlose Testversion von Magzter GOLD, um auf Tausende kuratierte Premium-Storys sowie über 8.000 Zeitschriften und Zeitungen zuzugreifen.
Bereits Abonnent ? Anmelden
Diese Geschichte stammt aus der July 2021-Ausgabe von Kiplinger's Personal Finance.
Starten Sie Ihre 7-tägige kostenlose Testversion von Magzter GOLD, um auf Tausende kuratierte Premium-Storys sowie über 8.000 Zeitschriften und Zeitungen zuzugreifen.
Bereits Abonnent? Anmelden
MAKING A DIFFERENCE IN THE LIVES OF DISABLED VETERANS
He suffered grave injuries in the line of duty. Now he helps other veterans who have disabilities.
DO YOU NEED UMBRELLA INSURANCE?
A policy can protect you from financially devastating events.
Navigating Finances as a Blended Family
Money matters can get complicated when two families unite. Planning is key.
BREAKING UP WITH YOUR BROKER
Be aware of these challenges when you move your money to a new home.
CHOOSE A MEDICARE PLAN THAT'S RIGHT FOR YOU
Consider your health care needs over the long term as you weigh costs and coverage.
Keep Faith in These Stocks
IN 1997, I coined the phrase “faith-based investing.” It has nothing to do with religion or with picking stocks at random.
OUR ESG PICKS ARE THRIVING
Despite an ongoing backlash, our favorite stocks and funds focused on environmental, social and corporate governance issues had a good year overall.
MONEY MANNERS FOR THE MODERN AGE
The customs for splitting a restaurant check, purchasing a wedding gift, tipping and more have evolved. These guidelines can help.
ELECTION 2024: POLITICS AND YOUR PORTFOLIO
Who wins the White House matters—but only at the margins when it comes to your investments.
YOUR GUIDE TO OPEN ENROLLMENT
With health care costs on the rise, it’s critical to select a plan that fits your needs at the right price.