When Cash is King or Queen
Make Sure There is not a Tariff for Being Liquid

by Peter Rizzo

Life Settlements in a Retirement Account? Think Again.

Many of our clients are stock piling their cash in order to pounce when they feel a deal is too good to pass up. This is a strategy used by many savvy investors, but it has its pitfalls so be sure you know what to watch for.

It might seem ridiculous to think that something could be wrong with cash, but sometimes with close scrutiny the fees are higher than the guaranteed return. Before one of the last crashes, I cashed everything out and was gloating on the sidelines, watching markets tumble, real estate prices decline, and everybody in the state of wondering what to do next.

As I watched my account balance depreciate, I was shocked, for how can you lose ground with cash? Much to my surprise I found out that the money market account I had my cash in was charging a higher management fee than it was paying in returns.

There was a very small difference but it was enough to catch my eye. A representative explained to me that with the reporting necessary, they must charge fees to make it worthwhile to hold the cash. From that day forward I look at the fees, even when it is cash. If you just sit on the sidelines, find a vehicle where the fees won’t kill you and are commensurate with exposure.

Cash is King or Queen, but make sure it’s ready to use and you are not charged an access fee for your own currency.

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