During a recent liquidity crunch, I kept thinking how nice it would be to have more cash sitting in my bank account. Once I received a $106,000 real estate capital distribution, I felt a tremendous relief. But then I was faced with the somewhat stressful decision of how to reinvest it.

My private real estate fund invested $47,000 of my capital in a deal seven years ago. It earned roughly a 12.2% internal rate of return, leading to the $106,000 capital distribution. For seven years, I didn’t think about my $47,000 investment at all until the surprise distribution came. It was nice, which is one of the main reasons why I enjoy investing up to 20% of my capital in private funds.

However, let’s talk about how having cash could make you poorer if you’re not careful. It’s a little ironic with so much talk about cash being king.

Keep reading this article on Financial Samurai.

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