Cash is King

As a good friend and successful investor once told me, “better to have it and not need it than need it and not have it.”  I recall the comment was for insurance but it seems appropriate here.
In the securities world, advisors make asset allocation decisions primarily between stocks, bonds and cash.  Further diversification can be made by owning alternative investments ( ie. real estate )although most of us are homeowners and some landlords already.
Beyond emergency savings there are several reasons not to discount the value of cash.  Some of the benefits of having cash can be broken down into both emotional and practical reasons.
I’ve always tended to ask clients how much money they need in their chequing account at all times so they sleep better at night.  For the most part I consider it best to maintain their comfort level at all times.
As we know, it is a lot easier to get a loan if you really don’t need one to begin with and you can likely negotiate a more favourable rate.  A credit card is in essence a pre-approved loan and those will plenty of cash are never at the mercy of those looking to enslave one to a life of debt.  Those with nest eggs can also evaluate all the various insurance premiums they pay choosing higher deductibles or possibly skip altogether and “self-insure”.
Often a client will ask me about why they have some idle cash in their investment accounts that is not presently invested.  On the surface this may appear to be a lost opportunity.  Speaking only for myself, this is by design and provides options when markets make them available.  The markets are somewhat a giant game of chess.  Make your moves thoughtfully and keep options open.  Cash in an account helps.
We all know financially successful people always on the receiving end of good information.  This information is usually brought to them by others for the opportunity to buy businesses, property, mortgages, collectibles etc. when they come available.  Why?  Perhaps they just became known as people with the desire and ability to act when presented with an opportunity (and also because they had cash available).
Sure, even when cash is in a higher interest rate account or in a cashable term deposit it will tend to lose purchasing power to inflation and taxes over time.  Still, you might consider the above just a snapshot of some of the reasons why cash is STILL KING.