My name is Evan Vladem, and I’m a partner and financial advisor at Associated Investor Services. I get it... talking about money can be intimidating... So, we created a judgment-free space where there are no "dumb" questions or embarrassing situations.
Everything and anything is welcome, and we'll provide our best answers and/or guidance. Feel free to submit questions or letters directly to me via email HERE. You have my word, your identity will remain anonymous to our readers.
Dear Financial Advisor,
I'm 35 years old and have a CD with about $75,000 that's about to mature. I already have an emergency fund, contribute regularly to my retirement accounts and have additional investments. I don't have any major purchases planned, but I'm hesitant to invest the money because the market seems expensive. Should I renew the CD, keep it in cash or invest it?
-A Curious Cash Hoarder
Dear Curious Cash Hoarder,
This is a great question because it's one I hear often. The real issue isn't what to do with a maturing CD—it's how much cash you should actually keep, and what should happen once you've reached that amount.
Many people don't intentionally decide to hold excess cash. It simply accumulates over time. A bonus gets deposited, a CD matures, or money continues building in a savings account. Without a plan, cash becomes the default.
The first step is determining how much liquidity your household actually needs. A good starting point is an emergency fund equal to three to six months of essential living expenses, but that isn't a one-size-fits-all rule. Job stability, variable compensation, upcoming life events and your overall financial situation all play a role. Business owners and those with less predictable income may want to maintain larger reserves because their income and net worth are often tied to the success of their business.
It's also important to distinguish an emergency fund from planned spending. If you're saving for a home renovation, taxes, a new vehicle or another major purchase over the next few years, that money should be identified separately. Cash that has a purpose is very different from cash that's simply sitting idle.
Even money held for liquidity should be working for you. Review what your checking, savings and money market accounts are earning to make sure they're appropriately positioned. Safety and accessibility don't have to mean earning little or nothing.
Once you've established adequate reserves and accounted for known expenses, ask yourself a simple question: What is the purpose of the remaining cash?
This is where many investors get stuck.
Some continue holding excess cash because they're waiting for a "better" time to invest. The challenge is that market timing requires two correct decisions: knowing when to stay out of the market and knowing when to get back in. Even if the market declines, many investors hesitate because the headlines have become even more negative.
Here's a good test: If the market fell 10% tomorrow, would you invest your excess cash—or would you wait for it to fall another 10%? If the answer is that you'd probably keep waiting, you may not be preserving cash for an opportunity. You may be unintentionally turning cash into a long-term investment strategy.
The answer isn't simply "invest it" or "keep it in cash." The answer is to create a system. Once you've identified your emergency reserves and planned spending, decide in advance what should happen when cash rises above that level. Depending on your goals and time horizon, some money may remain in cash or conservative investments, while the rest can be invested through a disciplined process. Whether that's recurring monthly investments, scheduled transfers, periodic reviews or another approach, having a plan is often more important than trying to find the perfect entry point.
The best time to decide what to do with excess cash is before the market gives you a reason to change your mind.
Ultimately, every dollar should have a job. Some cash protects you from emergencies. Some funds future purchases. But once those needs are met, excess cash should have a clear purpose and a repeatable process rather than waiting indefinitely for the "perfect" opportunity.
Cheers,
-Evan Vladem