A survey from HSBC Bank reveals that millionaires take a position on cash higher than what financial planners generally advise. 472 “mass affulent” individuals — those with at least $1 million available to invest — were surveyed, and 34% have at least 20% of their investable assets in cash. The mass affluent watch stocks even if they aren’t invested right now. Perhaps they are waiting until the market sentiment is a little better.
Based on my May balance sheet, I have $40,381 invested in mutual funds (almost completely equity funds) and ETFs and $19,342 in investable cash. My cash position is 32%. That’s probably too high when looking at the long-term picture, but having less cash than that wouldn’t provide me with an emergency cushion.
If the mass affluent are waiting for a better time to invest in stocks, the contrarian in me says this is a good time to invest. By getting in before a “mad rush,” one may be able to ride the rising tide. Market timing is dangerous, though, so good luck.
Speaking of HSBC, HSBC Direct raised their interest rate on their savings account to 4.8% APY, one of the highest rates available online.
Updated March 29, 2011 and originally published June 20, 2006. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.