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Should I Convert Part of My Portfolio to Cash
Old 04-22-2011, 09:03 AM   #1
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Should I Convert Part of My Portfolio to Cash

If I would like to purchase a residence instead of renting, does it make sense for me to convert some of my portfolio to cash or some other liquid investment since the portfolio has grown a lot fairly recently? Would doing this be the equivalent of working on "paying off the mortgage" even before I have one?

Typically, I keep and 80 % stock and 20 % bond allocation and a portion of liquid assets to cover emergeny funds and a down payment on a residence. I am wondering if I should increase the amount of my liquid assets.

I am still in the accumulation phase and will be for at least another 5 to 10 years.

Thank you for your advice.

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Old 04-22-2011, 09:36 AM   #2
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Opinions differ, but I would do what insurance companies do and match the maturity of my assets with that of my liabilities. If I know, or think, I'll have a large expenditure to make in the next couple of years (like buying a house) I'd want to have assets with maturities no longer than the date when I think those expenditures will arise. If I'm actively house shopping and could pull the trigger anywhere between now and several years from now, holding your down payment money in cash is entirely appropriate.
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