{"id":13726,"date":"2020-06-05T09:56:38","date_gmt":"2020-06-05T13:56:38","guid":{"rendered":"https:\/\/azzadasset.com\/?p=13726"},"modified":"2024-04-15T12:59:59","modified_gmt":"2024-04-15T12:59:59","slug":"why-going-100-cash-is-stupid","status":"publish","type":"post","link":"https:\/\/intelliserver.net\/wordpress\/market-commentary\/why-going-100-cash-is-stupid\/","title":{"rendered":"Why going 100% cash is stupid"},"content":{"rendered":"\n

Your investment portfolio is like a bar of soap. The more you touch it, the smaller it will get.<\/em><\/p>\n\n\n\n

Let\u2019s be real: Some of our clients are skittish. Like many people, when they see negative headlines, their first instinct is to sell their stock holdings and head for the perceived safety of cash. This is a bad idea for lots of reasons.<\/p>\n\n\n\n

First, though, let\u2019s get one thing out of the way off the top: You should know that Azzad receives no financial incentive to keep you in stocks. We charge a fee comprised of a percentage of assets held, which means no commissions, no hot stock tips, and no gimmicks. You pay us for advice. We\u2019re not brokers; we\u2019re registered investment advisors, which means that we have a fiduciary duty to the clients we serve. Simply put, we\u2019re legally obligated to put our clients\u2019 needs first. We\u2019re looking out for you.<\/p>\n\n\n\n

So, when an Azzad advisor recommends that you stay the course, it\u2019s not because he or she is trying to squeeze money out of you; it\u2019s because they\u2019re trying to keep you from getting squeezed. That\u2019s their job.<\/p>\n\n\n\n

Next, up volatility. After years of relative calm, it\u2019s back with a vengeance. Rationally, we all know that our accounts can go up and down each day\u2013sometimes by a lot. We know that when we get into investing. It comes with the territory. Checking your account can create unnecessary stress and perhaps worse, may end up pushing you to act when you shouldn\u2019t.<\/p>\n\n\n\n

It might be helpful to think of stock ownership like home ownership. Your home is an asset, too, probably one of your largest assets. But chances are you\u2019re not checking Zillow every day to see how the value has changed because you\u2019re not planning on selling any time soon. You know the housing market goes up and down.<\/em><\/p><\/blockquote>\n\n\n\n

Unfortunately, when the market is up and everyone is growing their assets, planning and portfolio construction can take a backseat for many investors. Portfolios that are thoughtfully constructed and diversified are built to withstand a variety of market conditions over the long term. That is not to say things can\u2019t go wrong or diversification will insulate you from losses\u2014because it won\u2019t.<\/p>\n\n\n\n

But investors have much better odds of success when they rely on tested investment principles, data-driven methodologies, and the support of an Azzad advisor who will help them navigate choppy waters.<\/p>\n\n\n\n

Financial planning and modeling is perhaps the best way to sleep at night during periods of extreme market volatility. In working with clients, we run Monte Carlo simulations to account for the inevitable ups and downs in the market to help investors grow comfortable with what their portfolio may be able to withstand over time.<\/p>\n\n\n\n

We\u2019ve said it before, but it bears repeating. \u201cTime in the market\u201d is generally more effective than trying to time the market. An investor who remained fully invested in the U.S. stock market over the past 30 years would have received almost triple the return of an investor who missed the best 12 months of market performance.<\/p>\n\n\n\n

Regardless of what happens to the markets, stick to your investment program. Market pros agree: Changing your strategy at the wrong time can be the single most devastating mistake you can make as an investor. And even if they won\u2019t say it outright, deep down they know the following is true: Going all cash is a stupid financial move.<\/p>\n","protected":false},"excerpt":{"rendered":"

Your investment portfolio is like a bar of soap. The more you touch it, the smaller it will get. Let\u2019s be real: Some of our clients are skittish. Like many people, when they see negative headlines, their first instinct is to sell their stock holdings and head for the perceived safety of cash. This is […]<\/p>\n","protected":false},"author":1,"featured_media":10244,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[88],"tags":[],"class_list":["post-13726","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-market-commentary"],"yoast_head":"\nWhy going 100% cash is stupid - Azzad Asset Management<\/title>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Why going 100% cash is stupid - Azzad Asset Management\" \/>\n<meta property=\"og:description\" content=\"Your investment portfolio is like a bar of soap. The more you touch it, the smaller it will get. Let\u2019s be real: Some of our clients are skittish. 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