At Hill Investment Group, when a few clients ask the same question, we know others are likely wondering, too. That’s why we created “Hey Hill”—a recurring newsletter feature where we answer common client questions and share our take. Have a question? Email us at service@hillinvestmentgroup.com.
We get this question all the time. While it sounds simple, the answer is personal. That said, we can use evidence and clear thinking to guide a smart approach.
It’s tempting to hold extra cash “just in case.” It feels safe. But over time, too much cash is actually a silent killer. It quietly erodes your purchasing power and your progress. Inflation eats away at its value, and the opportunity cost adds up.
Just like any of your assets, both allocation and location are essential considerations.
Here’s how we think about managing your cash strategically:
Start with the essentials.
Keep 3 to 6 months of living expenses in a high-yield savings account. 12 months if you’re particularly anxious. Think of this as your cushion for the unexpected.
Currently, we recommend our high-yield, easy-to-use cash management tool like this one. With it, we’re helping clients earn around 4% (as of publication) on cash, with no additional cost. This method also comes with enhanced FDIC protection and next-day access when needed—it’s perfect for things like tax payments or big upcoming expenses. It’s an ideal spot for cash you might need soon but still want working for you.
Don’t let cash pile up where it’s not working.
Checking accounts are for paying bills—not stockpiling. Once the essentials are covered, move excess cash into higher-yield options like the above or reallocate it toward long-term growth. Every dollar should be pulling its weight.
Cash in your portfolio? That’s a drag.
Cash is a return-killer in investment portfolios. We keep it low by design. Holding unnecessary cash means giving up potential growth. It’s one of the small but meaningful ways we “pick up pennies” for our clients without increasing risk.
The goal isn’t zero cash—it’s the right amount in the right place.
We’ll help you strike that balance so you’re confident, covered, and focused on taking the long view.
