I have a question relating to how much cash you suggest an investor to hold.

Let me explain. I am 53 years of age and plan to work for 5 more years before retiring. My employer provides me with rent free housing. I have no debt and hold $3.5 million dollars in Australian equities, term deposits and cash. My wife and I save about $160,000 per year from wages and investment returns.

Of the assets we own, we hold 14 per cent in cash in case we get a major pull back (eg: Mr Un and The Donald start fighting) in which I would buy equities at a cheap price.

I sometimes hear fund managers saying they hold 10, 20 and up to 40 per cent cash in the current market. What do you think is a sensible percentage of cash to hold?