I never prescribe one overall asset-allocation formula because no such solution suits everyone. That includes the popular 60-40 stocks-to-bonds ratio, which advisers frequently recommend to retirees or preretirees who are afraid to lose principal but still need growth alongside immediate income. I also avoid dictating how much cash to hold, unless your answer is 100% — especially if you limit yourself to money market funds, Treasury bills and bank deposits.
However, there is another, often overlooked cash-management opportunity you can employ after you decide what percentage of your portfolio to keep in ready money: how best to distribute savings in interest-earning investments.
