The primary purpose to hold cash in your savings account is to bolster against emergencies and unexpected expenses. In other words, a cash storage acts as an emergency fund. However, holding too much of your portfolio as cash – as opposed to investing in the stock market, for example – means that you are both disproportionately exposed to the dangers of inflation and not optimally employing your capital for investment.
The post How Much Cash Should I Have On Hand? originally appeared at Barbara Friedberg Personal Finance.