Cash Is King
In my article last week I started talking about the barbell strategy which is an investment strategy that places your portfolio into two baskets: high risk and extremely safe. This is an effective strategy because instead of your portfolio being mildly conservative or aggressive, it is both hyper-conservative AND hyper-aggressive at the same time. By doing so, it limits your downside risk—the total amount you could possibly lose — yet exposes you to potentially unlimited upside.
I find that this strategy gives you flexibility. If the market drops 20%, you can take some of your safe investments and buy stocks at a cheap price. You don’t have this option if you’re fully invested in stocks or crypto. Cash on the sideline gives you freedom - and in today’s interest rate environment, you’re making a nice return to sit and wait.
With interest rates at multi-decade highs, finding high-yielding risk-free investments is incredibly easy, yet I still hear people tell me that the cash in their checking account is making less than 1%…If this sounds like you then it’s time to move your money. There’s a ton of ways to maximize your yield at almost zero risk - and in this article for premium subscribers, I’m going to go over some of my favorite ways.