When Warren Buffett stepped down as CEO of Berkshire Hathaway at the end of 2025, the company held an enormous stash of cash. Berkshire reported more than $370 billion in cash equivalents on the books at year-end, largely held in Treasury bills.
It wasn’t a matter of simply being more conservative with his investments in his old age, 95-year-old Buffett told NNA’s Heyley Quick in “Warren Buffett: A Life and Legacy.” Rather, he explained, it would take an enormous investment to move the needle in a portfolio of Berkshire’s size. And he hadn’t been able to find an investment worth spending his large cash pile on.
“It’s external circumstances,” he told Quick. “Believe me, if after we get finished talking you say, ‘I’ve got a great $100 billion new idea.’ I would say, ‘Let’s talk.’”
All in all, Buffett said he would rather be putting his money to work making more money. While the cash on the company’s books brings in a modest amount of interest, Buffett prefers productive investments, such as stocks, that can grow at a compounding rate over time above and beyond the rate of inflation.
“It’s at certain levels necessary, but cash is not a good asset,” he said. It’s like oxygen for your portfolio, he added — cheap to obtain and necessary, if unexciting. Essentially, Buffett likes to keep some level of cash to pay obligations and as “dry powder” for any attractive acquisitions.
“You do need oxygen, and if you’re ever without it for four or five minutes, you will learn,” Buffett said. “And cash is that way. So you always need to have it available, because you do not know what will happen.”
How to hold cash the Buffett way
When he was running Berkshire’s immense portfolio, Buffett’s cash dilemma wasn’t necessarily relatable to everyday investors — not many of us have more money than we can reasonably deploy. But the Oracle of Omaha’s approach to managing cash is nevertheless in line with what many financial pros recommend for their clients.
Notably, Buffett doesn’t flee to the safety of cash or bonds when he believes the market is overvalued or that a crash is imminent. Even though the cash position grew as he and Berkshire waited for attractive opportunities, he said repeatedly that he’d prefer to be invested.
“Berkshire shareholders can rest assured that we will forever deploy a substantial majority of their money in equities — mostly American equities although many of these will have international operations of significance,” Buffett wrote in his 2024 shareholder letter. “Berkshire will never prefer ownership of cash-equivalent assets over the ownership of good businesses, whether controlled or only partially owned.”
Buffett said in that letter that periods of runaway inflation have, in the past, eroded the value of cash and left bonds in the dust. Investable businesses, by contrast, “will usually find a way to cope with monetary instability as long as their goods or services are desired by the country’s citizenry,” Buffett wrote.
Indeed, from January 1975 through January 2026, the S&P 500 index rose by nearly 6,700% compared with a 524% increase in the Consumer Price Index, according to data analyzed by Charles Schwab.
In general, Buffett has urged investors to invest regularly in a broadly diversified way over the long term. “Consistently buy an S&P 500 low-cost index fund,” Buffett told NNA in 2017. “I think it’s the thing that makes the most sense practically all of the time.”
Some level of cash, however, remains essential because no one — not even Buffett — knows what will happen over the short term. “I may have read every book in the public library, but I didn’t find the answer then to the question of what the stock market is going to do next week or next month or next year,” Buffett told Quick.
Financial advisors typically recommend that everyday investors build and maintain an emergency cash reserve equal to three to six months’ worth of expenses. That way, should an emergency arise — such as a job loss or a surprise medical bill — you can safely keep the rest of your financial life on track.
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