Many investors are unaware their rollover from a workplace retirement plan to an individual retirement account sits in cash as a default.
Moving money from a workplace retirement plan like a 401 plan to an individual retirement account is common when switching jobs or retiring.Holding excess cash is generally a mistake for long-term investors.Rollovers from a workplace retirement plan to an IRA are common after reaching certain milestones like changing jobs or retiring. About 5.
About 48% of people believed their rollover was automatically invested, according to Vanguard's survey.Holding cash — perhaps in a high-yield savings account, a certificate of deposit or a money market fund — is generally sensible for peopleBut saving bundles of cash for the long term can be problematic, according to financial advisors.
"99% of the time, unless you're ready to retire, putting any meaningful money in cash for the long term is a mistake," Chao said."History has shown that." "The problem is, most people end up forgetting about it and it sits there for years, decades, in cash, which is absolutely crazy," he said.
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