I try to remain fully invested in my Roth account. The math from staying invested typically works well. It clicked with me after reading Just Keep Buying from Nick Maggiulli. My account is still relatively small. If I max my account for the year I can still get around 10% cash. I have an emergency fund where if my cash flows aren’t affected from a downturn I’ll draw from that. As you mentioned it’s tough with microcaps due to volatility and I don’t live off my account. I’m 32 and have a long term horizon. At the same time with microcaps it’s unlikely I’ll hold something for 5+ years.
Tough question. I keep asking myself and other people the same question. Have 25% right now. Not sure what the right percentage is.
Thanks for sharing. I guess we only know the right level with hindsight. lol
I try to remain fully invested in my Roth account. The math from staying invested typically works well. It clicked with me after reading Just Keep Buying from Nick Maggiulli. My account is still relatively small. If I max my account for the year I can still get around 10% cash. I have an emergency fund where if my cash flows aren’t affected from a downturn I’ll draw from that. As you mentioned it’s tough with microcaps due to volatility and I don’t live off my account. I’m 32 and have a long term horizon. At the same time with microcaps it’s unlikely I’ll hold something for 5+ years.
Thanks for sharing. I like how you have another lever to pull with the emergency fund if needed.
I agree holding for 5 years is a long time for microcaps.
Having cash it's always a great risk/opportunities management tool.