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Financial Thought of the Day August 27, 2014: Cash Is King

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August 27, 2014 – Comments (0)

The rule of thumb in the past is to always have enough cash on hand to live on for six months. I would say in this day and age of economic volatility for your average Joe is to have enough cash on to live on for 1-2 years. Moreover, cash (over and beyond your emergency fund of course) allows you the opportunity to take advantage of lower stock prices when corrections.

 

Also when researching a publicly traded business its always preferable to find a company with a cash to stockholder's equity of at least 20%. Companies that store a lot of cash can get itself through a downturn.

 

Remember cash is king.

 

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