Recent events have shown why it is important to have a cash buffer in place. But it is not only a pragmatic viewpoint; you might even be holding cash in expectation that markets will hit the skids again, enabling you to buy into quality stocks weighed down by a general slump in valuations. If undertaken with a genuinely disciplined approach, this can be a viable investment strategy. But with negative real interest rates in play, the last thing you want to be doing is holding cash in your bank account with no intention of putting it to work in the near- to medium-term. It is essentially death by a thousand cuts, and the rapid expansion in the UK money supply through 2020 could accelerate the decline in sterling’s purchasing power.
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