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COPYRIGHT 2005 The Dallas Morning News
Byline: Will Deener
Aug. 22--A slug of cash, like a slug of whiskey, can steel the nerves.
And prudent investors should keep a little around -- cash, that is. But U.S. households are swimming in cash these days.
They are sitting on an estimated $5.6 trillion in cash, money market funds, savings accounts and bank certificates of deposits -- or about 14 percent of their total assets, according to the latest government report. That's up $1 trillion from three years ago.
"I think investors are looking through a glass darkly," says David Darst, chief investment strategist at Morgan Stanley. "Their outlook is relatively murky, so they are putting money under the mattress, so to speak."
You name it and people are worried about it -- rising gasoline prices, terrorism and a slowdown in corporate earnings growth. Also, the collapse of the Nasdaq stock market in early 2000 and the ensuing two-year bear market still haunt many people.
Investors should not be ashamed of holding cash. In fact, legendary investor Warren Buffett has about a third of his assets in cash. And hoarding cash can be psychologically comforting, although it won't help a person's income stream much.
The average yield on savings accounts ranges from a...
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