FA Center: Why this financial adviser thinks you should keep piles of cash handy

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In many asset allocation models, cash barely registers. It’s a blip, maybe 10% of holdings.

An investor’s age, income and risk tolerance come into play, of course. So do other variables. But as a general rule, financial advisers will recommend holding enough rainy-day cash to last perhaps a year — and not a dollar more.

Most investors, after all, need to put their money to work to maximize long-term results, right? Sitting on too much cash can cause them to miss years of double-digit stock surges, right?

Not so fast, says Brett Anderson.

Anderson, a certified financial planner in Hudson, Wis.

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