Using cash like a millionaire may not make sense for most investors. Here's why
Millionaires moved money out of stocks into cash and cash-like investments in the past year and may add to those allocations over the next 12 months, according to a new CNBC Millionaire Survey. But the average investor may not be wise to mirror the millionaires.
Much would depend on their circumstances and rationale for the shift, financial advisors said.
Millionaires held 24% of their portfolio in cash as of spring 2023 — up significantly from 16% in fall 2022 and 14% from spring 2022, according to the survey.
The poll considered cash and cash-like investments to include money market funds, checking and savings accounts, and certificates of deposit. It surveyed 764 people with $1 million or more of investable assets and was conducted in April 2023.
A recent Capgemini Research Institute survey also found affluent investors are holding a record share of cash.
Here are more FA Council perspectives on how to navigate this economy while building wealth.
On one hand, having more money in cash today isn't necessarily a bad move due to higher interest rates, advisors said.
Cash-like accounts had been paying rock-bottom interest rates for much of the period since the 2008 financial crisis — meaning investors largely had to turn elsewhere for any hope of a return on investment.
But interest rates have been rising steadily since the Federal Reserve started raising its benchmark rate aggressively last year to tame high inflation.
Today, cash-like accounts can yield investors up to roughly 5% or so, making it more attractive as an asset class, said Ted Jenkin, a certified financial planner based in Atlanta.
«Now investors have choice,» said Jenkin, founder of oXYGen Financial and a member of CNBC's Advisor Council. However, with
Read more on cnbc.com
