As financial advisors we are often asked, "how much cash should we set aside?" while others wonder, "why hold it at all, given such low returns relative to equities and fixed assets?" A proper answer to the second question requires a discussion of Modern Portfolio Theory - an involved topic for another day.  Today, we look at the question more fundamentally, in human terms. Cash means different things to different people.

You've no doubt heard the quote attributed to Albert Einstein: "Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it." You understand that time can be your greatest ally or your greatest enemy depending on how much or how little you have to save. Finally, you've heard that younger people can be more aggressive than older ones when investing in stocks because they have more time to recover from setbacks incurred during significant market downturns. Today we'll share some fascinating aspects of compounding that will surprise and perhaps frighten you.

Comments by Bill Gross and others of late have rocked the status quo and tested commonly held investment tenets. On Tuesday Gross proclaimed in his monthly outlook column that "The cult of equity is dying." "Like a once-bright-green aspen turning to subtle shades of yellow then red in the Colorado fall, investors' impressions of 'stocks for the long run' or any run have mellowed as well." He’s right on the latter observation anyway.

Ancient Greece is known as the cradle of western civilization. But today, the bough on which it rests threatens baby, cradle and all. How does a country barely 3% of the Euro economy, ($318B compared to $425B for NC) with a population roughly the size of North Carolina's (10 million) threaten an entire global economy?