It is easy to spend a great deal of time and effort thinking about stocks, bonds and other investments, yet forget the very important, but somehow less glamorous, aspect of a portfolio – cash. In soaring markets, cash can get shunted aside. In poor markets and in uncertain economic times, the importance of cash reasserts itself.

Now may be a good time to examine whether your cash is being managed for maximum benefit. While there are many aspects to savvy cash management, the chief questions are simple enough. Is the cash you are likely to need readily available? Is it working for you as well as possible? Develop a well-rounded cash management program, and you’ll be able to give positive answers to both. How Much Cash? There is no settled opinion on how much cash to keep aside for a rainy day. Recommendations range from three to 12 months of regular house-hold expenses. However much you decide is right for you, it should be an amount adequate to see you through most emergencies, yet not be so great as to condemn yourself to a relatively low rate of return on a massive portion of your portfolio. Regardless of the amount, your cash should be at work, drawing the best rates of return you can safely obtain. Federal Deposit Insurance Corporation-member banks offer account holders insured deposits of up to $250,000 per holder per eligible account. You can keep cash you want immediately available in interest-bearing savings accounts or money market funds, with more cash waiting in a laddered series of short-term certificates of deposit, if you choose. If you need to build up your cash reserves, you can do it in the same way you fund your retirement savings or taxable investments – arrange for a set amount to be whisked out of every paycheck or once a month, whichever you prefer. Managing Money You may have other cash available, too, and managing it should be part of your financial plan. Your brokerage account probably has a “sweep” option whereby cash from an equity sale is automatically swept into an interest-bearing account until needed for a new investment. That avoids simply storing idle cash. Make sure you know the rules and the sweep minimums so that your uninvested cash can work as hard as it can for you. Streamlined, successful cash management also means using your income wisely and avoiding unnecessary expenses. Paying off any ongoing credit card debt (and the interest that accompanies it) should be a priority. And it is wise to avoid unnecessary fees by arranging for no-fee or low-cost checking, as well as online bill-paying arrangements. And if you use a charge or debit card regularly, you might as well use one that provides rewards of the kind that would benefit you most, whether that’s travel, a cash-back percentage or gift cards usable at retailers you frequent. No matter what specific arrangements you make, keep in mind that your cash management skills can be as important to your lifestyle as your general investment preferences. Smart, coordinated cash management can have a positive impact on your portfolio’s performance. If you have questions about your cash management options, please don’t hesitate to call me. Christopher Keen, CRPS Financial Advisor 12800 N. Meridian St., Suite 100 Carmel, IN   46032 [email protected]   Material prepared by Raymond James for use by its financial advisors.