The younger you are, the more money you can put at risk through your investments and therefore the less cash you need. Conversely, the older you are, the more cash you need because the greater your need for investment safety and stability in your portfolio. Unfortunately, not enough investors consider cash an integral part of their overall portfolio. Throughout the '90s, investors have ignored cash and instead focused their attention on the stock market, because of the returns and the hype that has surrounded Wall Street. Yet, some of those folks are missing out on an important part of their investment portfolios.
Cash is the foundation upon which an investor's portfolio is built.
Think of it as having some ammunition left to fire. Two stocks that could fit that example quite nicely are Rite Aid and Xerox. Rite Aid's stock has slipped more than 80 percent this year, as the company has repeatedly had to restate downward its previous years' earnings. Most of the blame for the slippage fell on Chief Executive Officer Martin L. Grass, whose father founded the Camp Hill, Pa.-based company more than 40 years ago. Rite Aid found some life Tuesday, the day after Grass resigned.