In investing, cash is generally viewed as something best avoided or minimized. Holding some may be necessary for basic liquidity needs, but the classic investment strategy is to keep as little on hand as possible, and to put the rest to work on long-term goals.
Recent research, however, suggests that holding cash appears to improve our feelings of financial well-being and life satisfaction. And this research has ramifications for the entire advisory industry. If clients actually feel happier when they hold more cash, perhaps their portfolios should be adjusted accordingly.
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