Optionality, resilience, and the cost of carrying it.
| Concept | Explanation | |---|---| | Emergency liquidity | Capital reserved for essential needs. | | Portfolio cash | Unallocated capital available for opportunities or risk reduction. | | Liquidity reserve | Assets that can be sold quickly with limited loss. | | Dry powder | Informal term for capital held for future deployment. | | Cash drag | Lower expected return from holding cash during rising markets. |