Stocks and bonds seem to draw the most attention in an investment portfolio.

After all, these investment vehicles, and others derived from them, provide potential growth and income opportunities — which is why you invest in the first place.

Yet, you also may find significant value in a more humble financial asset: cash. You might be surprised by the various ways that cash, and cash equivalents, can help complete your financial picture.

Consider cash's uses:

• Unexpected expenses and emergencies: You’ll need sufficient cash for situations such as a job loss, a home repair or an unplanned medical expense.

During your working years, keep three to six months’ living expenses in a cash account designed to meet unexpected expenses. Once retired, you may be able to get by on a smaller emergency fund — up to three months’ living expenses, although you will need more for everyday spending.

• Specific short-term savings goal: Are you anticipating a big expense —a wedding, vacation or down payment on a new home — within the next few years? If so, set aside sufficient cash, with the exact amount depending on your specific short-term goal.

• Everyday spending: You’ll need adequate cash for everyday spending needs such as groceries, utilities, entertainment and mortgage or debt payments. While working, you will probably handle most of these costs with paychecks, but you may still need to set aside one or two months’ living expenses.

Once retired, though, it’s a somewhat different story.

While your expenses may go down in some areas (such as costs associated with employment), they are likely to go up in others (such as health care). So your overall cost of living may not drop much, if at all.

It may be a good idea to set aside 12 months’ living expenses, after incorporating other sources of income, such as Social Security and outside employment.

In addition, decide on the most efficient way of drawing other income sources, including Social Security and investment accounts such as an IRA, a 401(k), etc.

It’s especially important to create a sustainable withdrawal strategy for your investment portfolio because you don’t want to run the risk of outliving your money.

• Source of investment: You’ll want to have some cash available in your portfolio — perhaps 2-3 percent of the portfolio’s value — to take advantage of investment opportunities as they arise. Having even a small percentage of your portfolio devoted to cash can modestly improve overall diversification — and a diversified portfolio is your best defense against market volatility. (Remember, though: Diversification can’t guarantee a profit or protect against loss.)

So, there you have it: four key uses of cash. They provide some good reasons to keep at least a modest “stream” of liquid assets in your portfolio.

Joe Faulk is a Crestview financial adviser.

This article originally appeared on Crestview News Bulletin: FINANCIAL FOCUS: Here are cash's 4 key uses

CRESTVIEW — Tri-County Horticulture Studies Group will meet at 10 a.m. Oct. 16 at the McMahon Environmental Education Center, 132 Butler Circle, Crestview.

John McMahon, retired forester, has spent many years planting over 100 trees indigenous to Florida in the park. Okaloosa County Forester Maria Wilson will identify trees at the center and tell participants about them.

Afterwards the group will visit Oliver’s Nursery, 4550 Kelly Mill Road, Holt. This nursery goes all out for a fall festival, so it will be all decked out in fall finery.

Participants are invited to bring a sack lunch and drink and join the group for a picnic at the nursery. Picnic tables are on site.

The Tri-County Horticulture Studies Group is sponsored by Valparaiso Garden Club. All who are interested in learning more about gardening in Okaloosa, Walton, Santa Rosa, or neighboring counties are welcome.

For details, contact Marie Harrison, marieharrison@valp.net or 850-678-2842. Additional information is available at www.mariesgardenanddesign.com.

This article originally appeared on Crestview News Bulletin: Tri-County Horticultural Studies group to tour Crestview environmental center

Your car could break down. You might need a new furnace. You must pay for one last term of college for your child.

One day, you may need a large sum of money fast. As you look around for a source of funds, your eyes might come to rest on your 401(k) plan. It’s there, it’s yours — why not tap into it?

Actually, there are good reasons for not dipping into your 401(k). But before we get to those, let’s see how you might access money in your plan.

Some employers allow 401(k) loans only in cases of financial hardship, although the definition of “hardship” can be flexible. But many employers allow these loans for just about any purpose. To learn your particular plan's borrowing requirements, contact the plan administrator.

Generally, you can borrow up to $50,000, or one-half of your vested plan benefits, whichever is less. You have up to five years to repay your loan, although the repayment period can be longer if you use the funds to buy a primary residence.

So you have some time to repay the loan, you’re paying yourself back with interest, and repayments are probably just deducted from your paycheck.

Sounds pretty good, right? What could be the problem?

Well, here's a few of them:

• You’ll likely reduce your retirement savings. Your 401(k) plan is designed to help you build funds for one purpose: retirement. To encourage you to take advantage of your 401(k), the government defers taxes on earnings and allows you to make contributions with pre-tax dollars. But when you take out a loan from your 401(k), you are removing resources earmarked for your retirement. And even though you’ll repay the loan, you can never get that time back when your money could have potentially grown.

• You’ll be taxed twice on the loan amount. As mentioned, you typically contribute pre-tax dollars to your 401(k).  But when you repay the loan, you’re doing so with after-tax dollars.  When you withdraw the money at retirement, it will be taxed again.

• You’ll have to quickly repay the loan if you leave your job. If you leave your job, whether voluntarily or involuntarily, you’ll generally be required to repay the loan in full within 60 days. If you don’t repay it by then, the outstanding balance will be taxable — and if you’re under 59-1/2, you’ll also have to pay a 10 percent penalty tax.

To avoid the position of having to someday borrow from your 401(k), try to build an emergency fund containing six to 12 months’ worth of living expenses. Keep the money in a liquid account so that you can tap into it quickly.

It can be tempting to borrow from your 401(k) today — but if you can resist this temptation, you’ll almost certainly be glad tomorrow.

Joe Faulk is a Crestview financial adviser.

This article originally appeared on Crestview News Bulletin: FINANCIAL FOCUS: Think twice before taking out 401(k) loans