Having a percentage of your portfolio in cash can allow you to take advantage of investment opportunities as they arise. A cash allocation can be useful if you want to overweight or undervalue certain asset classes in your portfolio based on your market outlook. When markets become volatile, cash gives customers confidence that they can weather the storm. This is especially important, as customers with a liquidity buffer that is too small may panic and be tempted to sell stocks at precisely the wrong time.
Having cash can help customers stay on track and focus on their long-term financial plans.