Cash Reserves Can Extend Nest Egg's Life
January 8, 2014
Kiplinger-The accounts without the cash reserve had considerable trading costs because the investment portfolios needed to be tapped every month for expenses, says study co-author John Salter, associate professor of personal financial planning at Texas Tech University.
With savings accounts and certificates of deposit continuing to pay next to nothing, you may fret that you'll throttle your nest egg if you follow the widespread advice to maintain a cash reserve of up to a year for expenses. No worries: A new study shows that your nest egg may actually last longer if you keep a one-year cache of cash.
..
The accounts without the cash reserve had considerable trading costs because the investment portfolios needed to be tapped every month for expenses, says study co-author John Salter, associate professor of personal financial planning at Texas Tech University.