How much cash should I hold?

Enable's IFA’s in Bishops Stortford tend to recommend that everybody should hold at least some of their money in cash,  for nothing else than to cater for any short-term emergencies or requirements to avoid the need of going into debt but few cash accounts pay a rate of interest that beats inflation.

Financial experts agree that people should put aside a minimum of three months of earnings to cover themselves in case of an emergency such as job loss, six months may give more of a cushion.
But how investors hold cash in their portfolio depends on your personal circumstances. Cash Isa’s still have their place and deposits of cash made by most private individuals in the UK with all UK banks and building societies are covered under The Financial Services Compensation Scheme (FSCS); this scheme guarantees deposit balances in savings accounts, cash Isas and current accounts up to £85,000 per person per financial institution in the event of such an institution becoming insolvent and unable to repay depositors. Those with joint accounts each have a separate £85,000 limit. However, the FSCS protection is per institution rather than per account, so multiple accounts at one bank will still be guaranteed only for a combined total of £85,000 per person.

Sean McCann, chartered financial planner at NFU Mutual, points out that while savers can benefit from security in absolute terms if they hold money in cash, with interest rates still at historic lows, they are continuing to lose money in real terms. “Although cash accounts in banks or building societies are relatively low-risk, savers will struggle to find an account that pays out a rate of interest that beats inflation,” he says. You should keep in mind when saving that the real value of your cash (that is what you can buy with it) can fall with inflation, even though you will get back its nominal value. Enables independent financial advisors can help you manage how much cash to keep and where.




Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE