William Lako: When playing it safe backfires: How too much cash can hurt retirement

I recently worked with a couple with 70 percent of their seven-figure portfolio in cash and high-yield money market accounts, earning around 4.85 percent on their deposits. Although they understood they were earning less than the long-term potential of 8 percent to 10 percent in the stock market, they preferred the relative safety of cash and cash equivalents.

While this is an extremely conservative approach, I can understand their comfort with those rates, as they take on little risk. Since their financial plan showed that they only needed 4.5 percent growth for their assets to last throughout their lifetime, their reasoning was, “Why take on the risk of investing?”