Cash has a place in a portfolio, however, too much cash is not a good thing. Cash can be a really good choice for an emergency fund or a short-term savings goal because it's low risk. You'll know the money is available when you need it, regardless of what the stock and bond market does. But for long-term goals, cash is not a good option because it has really low returns, if not negative returns when you take into account inflation.

Don’t hold cash in your long-term savings accounts.

It's not uncommon for me to see younger investors with cash in their IRA, Roth IRA, 401K, and 403b. These are retirement accounts that you can't distribute from until you're age 59 1/2 without paying a penalty for the most part. There are exceptions, but most people will keep their money in these retirement accounts until at least that age, if not longer. So why the excess cash?

Confirm that your future retirement contributions are being invested automatically.

The two main reasons that I come across is one, they think that their future contributions are being invested automatically. So perhaps they just invested $6,000 into their Roth IRA and they thought it was automatically going into one of the investments in their account. That wasn't the case. So that's a call or reaching out to the investment company to see if you can set that up so that future money will be invested as you dictate. That will prevent the cash from just sitting idly or having another thing on your to-do list - to go in and make sure it's invested.

Confirm interest and dividends are being reinvested.

The other reason I see is that stocks and bonds pay interest and dividends. That income could be reinvested or paid to cash. So it could be that the interest and dividends are set to pay to cash, and that is why the cash is accumulating in the account. Again, just really easy to contact the investment company if you're not able to do it online and have interest and dividends reinvested in the accounts that are meant for those long-term goals.

Reach out with any questions. My name is Linda Rogers, Owner of Planning Within Reach.

Planning Within Reach, LLC (PWR) is a fee-only and fiduciary wealth management firm offering one-time comprehensive financial planning and ongoing impact-focused investment management in San Diego and nationwide. PWR is a woman-owned firm that specializes in busy professionals and impact investors. Planning Within Reach, LLC and their advisors do not receive commissions and do not hold any insurance licenses or brokerage relationships.