Traders work on the New York Stock Exchange Prosecutor's Office on April 10, 2025.
Michael M. Santiago | Getty Images News | Getty images
Investors can feel an impulse to switch to money Recent stock tumult on the stock market. Although species can feel more security than actions, it can also pose risks For long -term savers, the financial advisers say.
Cash – Like the money held in a High -performance bank savings account Or a money market fund – is significantly less volatile than short -term actions, experts said.
But Cash has historically obtained lower yields in long -term actions. Hold on more money you need – rather than investing it – increases the risk of not achieving your investment goals.
The result: cash investors can find it difficult to achieve their long -term investment objectives and may have to save more of their discretionary income, Vanguard wrote in a paper This analyzed actions and cash yards.
Investors have fled actions for shelters perceived as American action benchmarks Pricing and commercial of the Trump administration and reprisals announced by large trade partners such as China.
After an announcement of the White House of specific prices in the country at the beginning of the month, the S&P 500 had its worst two-day section since the first days of the Pandemic Covid-19, losing about 11%.
Meanwhile, April 7 saw the highest volume of 401 (K) the plan of the plan since March 12, 2020, according to Alight Solutions, administrator of the pension plan. Bishop according to Alight, around 94% of the profits have increased to conservative assets such as the money market, bonds and funds of stable value.
The advantages and disadvantages of money
Cash has certain advantages.
For example, this is where investors need money for emergencies and major purchases, even if there is an upheaval on the stock market, said Carolyn McClana, certified financial planner of Life Planning Partners in Jacksonville, Florida.
“Everyone should have money and actions,” said McClanahan, a member of the CNBC Financial advisor advicewritten in an email.
But cash “has a long history” to offer “real” negative yields, which means that yields after taking into account inflation, according to in Morningstar.
In other words, consumers who have a 100% cash portfolio lose wealth over time after taking inflation into account, experts said. If interest rates on species do not follow the price increase, consumers lose purchasing power.
Meanwhile, actions have high growth potential, in particular in the long term, but are also compatible with risks, said McClanahan.
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“The ups and downs can be nauseating, and you may have bank losses if you need your money and you cannot browse market slowdowns,” said McClanahan.
“Each portfolio must be diversified on safe and risky assets depending on the financial and psychological capacity of the customer to take risks,” she wrote.
How to think of cash and mixing scholarships
Investors who are still in the “accumulation” savings phase – that is to say that people in their years of work always save part of their income – should keep enough money for emergencies in an easily accessible fund, said McClana.
They should also have any species they may need for purchases over the next five years, such as home deposit, car purchases or tuition fees, she said.
The rest must be allocated to actions and obligations according to their time horizon, as well as their “financial and psychological capacity to take risks,” said McClanahan. For example, a person who is retired should have a lower share of their portfolio in stocks compared to a person of 30 years of retirement, she said.
Persons retired or nearby, when they will have to start with money from their portfolio should have enough cash, short -term bonds and certificates of deposit To finance five years of income needsMore all the major purchases to come, said McClanahan.
The rest should be in a diverse fixed income and stock portfolio, she said.
Even retirees generally need to allocate part of their portfolio to actions: they can rely on their portfolios to finance their lifestyle for three or more decades, which means that certain growth in investments is necessary to avoid lacking money, according to experts.
All investors should have an investment strategy that states “how much they will have allocated to stocks, fixed income securities (bonds) and species and they should stick to this investment policy through all markets, good and bad,” McClanahan wrote in an email.
