As a financial planner or financial advisor, I often hear the question of “Should I move everything to cash”? Generally, the answer is an emphatic “NO,” provided you are invested correctly. However, I will grant you that it does beg the question of “Are you invested correctly?”, if you are contemplating a move to an all cash position. But, for the purposes of this article, let’s assume you are invested according to your appropriate individual risk profile, age profile, and overall retirement income source profile. Then, why NOT move to cash?

Three quick reasons:

If you sell your stock holdings when the market is down, then you have locked-in your losses;
Now, after the sale, you will have to decide when to get back into the market; and
If you miss the best 20 or 25 days in the market over the next 20 years, your portfolio rate of return might be negative (as the last 20 years have shown - versus a 6% rate of return if you had stayed invested).

Timing the market correctly once (e.g., determining when to sell) is very difficult, and timing the market correctly twice (e.g., determining when to sell and then when to buy) is almost impossible.

If you have questions about your cash position, your retirement plan, or your investment portfolio, please feel free to contact Intelligent Investing at www.mynmfp.com/new-clients for a no-obligation consultation.

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David L. Hogans, Esq. is an author and the founder of Intelligent Investing, Inc., a registered investment advisor firm located in Albuquerque, NM. He earned his Bachelor of Science in Chemical Engineering (ChE) from Virginia Tech and his Juris Doctorate (JD) from the University of Dayton. Mr. Hogans is licensed to practice law in the states of Virginia and New Mexico, as well as, before the Federal Patent Bar. For more information about Mr. Hogans and his firm please see his filing with the Securities and Exchange Commission (SEC) (https://files.adviserinfo.sec.gov/IAPD/Content/Common/crd_iapd_Brochure.aspx?BRCHR_VRSN_ID=602988).