If you regularly tune in to the blogs, podcasts and YouTube videos of popular finance influencers, you’ll hear a lot of advice that they all seem to agree upon. One area of overlap is that you should invest a certain portion of your income. While this is solid financial advice, some finance experts, like entrepreneur Mark Cuban, think a large portion of your portfolio should be in cash.
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Here are some of the reasons for keeping cash on hand.
When it comes to investing, few can match the accomplishments of Berkshire Hathaway CEO Warren Buffett. Over the years, Buffett has made a name for himself as a top investor who preaches patience and holding for the long term. However, Buffett doesn’t just invest; he also holds a lot of cash.
Toward the end of 2024, Berkshire Hathaway’s cash reserves reached $325 billion, doubling the amount of cash it had at the end of 2023. Having cash on hand gives Buffett the upper hand in terms of flexibility. When a stock’s price dips and he determines it’s undervalued, other companies might not have the liquidity to buy it up on the spot. However, Buffett’s cash reserve allows him to jump at the chance and maximize his profits.
Not everyone runs a multinational conglomerate like Berkshire Hathaway, but holding cash can still give you the chance to take advantage of opportunities that may later arise. Whether it’s an undervalued stock, a property or a rare watch, if you have enough cash on hand, you won’t need to rush to sell any other investments to acquire it.
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Buying low and selling high may be the most common investing advice out there. However, market volatility isn’t always great. Cuban, a successful entrepreneur, investor and TV personality, always keeps a large portion of his portfolio in cash because, whether it be political unpredictability, a global event or a new innovation, he isn’t a fan of losing money and doesn’t want to take big risks.
On Jan. 27, 2025, Nvidia’s stock dropped 17%, dropping its market cap by almost $600 billion — the largest plunge for a U.S. company in history. While the company quickly rebounded, Cuban didn’t feel right about buying in as he thought there was still too much uncertainty. Other market-shaking events, such as President Donald Trump’s tariff announcements, have also kept Cuban from investing. By keeping his money in cash, he’s been unaffected by the market swings and can stay confident about preserving his wealth.
