Why cash is the most undervalued asset in your portfolio

Cash normally seems like the dullest part of a portfolio – but times like these remind us why it’s worth paying the price to keep some in reserve.

Over the last three months, most of us will have been glad of any uninvested cash in our portfolios. That’s partly for reassurance: since we don’t know how long the coronavirus crisis will drag on and quite how terrible the economic consequences will be, it’s psychologically easier to feel we have a bit of a buffer to cover any unexpected expenses or losses to our income. We don’t want to have to sell investments at depressed prices or rely on dividends when they are being slashed. But more optimistically, having excess cash lets us take advantage of any opportunities that the market plunge throws up.

The ultimate option

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Cris Sholto Heaton

Cris Sholto Heaton is an investment analyst and writer who has been contributing to MoneyWeek since 2006 and was managing editor of the magazine between 2016 and 2018. He is especially interested in international investing, believing many investors still focus too much on their home markets and that it pays to take advantage of all the opportunities the world offers. He often writes about Asian equities, international income and global asset allocation.

Cris began his career in financial services consultancy at PwC and Lane Clark & Peacock, before an abrupt change of direction into oil, gas and energy at Petroleum Economist and Platts and subsequently into investment research and writing. In addition to his articles for MoneyWeek, he also works with a number of asset managers, consultancies and financial information providers.

He holds the Chartered Financial Analyst designation and the Investment Management Certificate, as well as degrees in finance and mathematics. He has also studied acting, film-making and photography, and strongly suspects that an awareness of what makes a compelling story is just as important for understanding markets as any amount of qualifications.