The importance of CASH in your Portfolio

The most important asset when the stock market is falling is cash. Always set aside some cash in 100% liquid funds. I prefer to keep it in a savings bank account. You might feel a little surprised at this idea, because this cash will not earn you anything, but you will realise the importance of this cash when the stock market falls and you will have some amount to invest.

This is not at all an attempt to time the market.

It is like an opportunity fund to be utilized when markets give chance. It can be tempting to invest all of your assets in stocks during a bull market. People ignore the value of cash in the portfolio. Keeping cash helps in avoiding the overvalued companies and also gives an opportunity to buy quality ones when opportunity knocks on the door.

I personally follow this rule and it has helped me a lot. People regret not having cash in their portfolios.