The HNW Cash Dilemma: How to Balance Liquidity and Growth

In Episode 11 of Retirement Tax Matters we discuss cash dilemmas for high-net-worth retirees: finding the right balance between necessary liquidity and optimizing your returns. While having readily accessible cash for emergencies is important, we explore the potential drawbacks of holding excessive amounts in multiple low-yielding bank accounts, which can add unnecessary complexity. Discover how recent T+1 settlement changes allow funds in conservative brokerage investments like money markets (sometimes yielding more) to be accessed typically by the next business day, challenging the need for overly large bank balances. Furthermore, we examine the tax inefficiency of earning substantial bank interest, taxed at high ordinary income rates, compared to potentially investing a portion of that excess cash to prioritize lower long-term capital gains rates (15-20%). This conversation provides a framework for simplifying your overall cash strategy, balancing peace of mind with potential growth and tax efficiency. | Disclosures