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Even Though Inflation Is Real, Here’s Why One Investor Is Keeping Cash on the

Quast: Exactly. This is to keep the lights on, to keep food on the table, and to keep you, in the case that you lose your income, keep you from having to settle for the first new income stream that comes along. Three to six months, now you have options. I really think that’s a powerful thing.

Then also, I like to keep money in cash that I think I might need in the next three to five years. Why is that? I’m going to quote Dave Ramsey here. He just said this the other day, and I thought it was so funny and so true. He said, “Your financial plan is this beautiful, yellow brick road, but you forgot to account for the flying monkeys.” There are flying monkeys. There are things that are going to derail your financial plan. If you think that you might need something in the next three to five years, that’s not for the stock market. It’s really not, because it’s so unpredictable. You don’t know when a bank in China is going to go bankrupt and knock the whole thing down. You don’t know when Enron is going to be caught in doing all sorts of things. You don’t know when these things are going to happen. They could happen now. It could happen next year. If you need the money in the next three to five years, you know you’re going to need, it shouldn’t be in the stock market.

For me, personally, I have some money on the sidelines. I know that I’m going to have medical expenses in the next year for a family member. I know that I’m saving up for an investment property, a piece of real estate that we want to put it on Airbnb, saving up for that. That’s in my three-to-five-year plans. That’s cash on the sidelines. I know it’s not making the best return, but I’m also insulating myself from the unexpected crash in the stock market.

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