When Warren Buffett stepped down as CEO of Berkshire Hathaway at the end of 2025, the company had a huge stash of cash. Berkshire reported more than $370 billion in cash equivalents on its books at year-end, the majority of which was held in Treasury bills.
Buffett, 95, told CNBC’s Becky Quick on “Warren Buffett: Life and Legacy.” Rather, he explained that significantly changing a portfolio of Berkshire’s size would require a huge investment. And he couldn’t find any investments worth spending large amounts of cash on.
“It’s an outside situation,” he told Quick. “If, after the talk, you say, ‘I have a great new idea that’s worth $100 billion,’ trust me, I’ll say, ‘Let’s talk.'”
Overall, Buffett said he wants to invest his money to make more money. Although cash on a company’s books does earn some interest, Buffett prefers productive investments such as stocks that can compound over time and outpace the rate of inflation.
“Cash is not a good asset, although it is necessary at a certain level,” he said. It’s like oxygen to a portfolio, cheap and necessary, if not exciting, he added. Basically, Buffett likes to keep some cash to pay down debt and as “dry powder” for attractive acquisitions.
“We do need oxygen,” Buffett said. “If you go four or five minutes without oxygen, you’ll know.” “That’s what cash is. You never know what’s going to happen, so you have to have it available at all times.”
Buffett’s way of holding cash
When he was managing Berkshire’s vast portfolio, Buffett’s financial dilemmas didn’t necessarily resonate with average investors. Most of us don’t have more money than we can reasonably manage. But Oracle of Omaha’s approach to cash management is consistent with what many financial experts recommend to their clients.
Notably, Buffett doesn’t flee to the safety of cash or bonds when he believes the market is overvalued or a crash is imminent. Although his cash position has increased while he and Berkshire wait for attractive opportunities, he reiterated that he wants to be invested.
“Berkshire shareholders can rest assured that we will permanently invest the majority of our capital in stocks, primarily U.S. stocks, many of which will have significant international operations,” Buffett said in his 2024 letter to shareholders. “Berkshire never prefers ownership of cash equivalent assets, whether controlled or only partially owned, to ownership of a good business.”
Buffett said in the letter that in the past runaway inflation had eroded the value of cash and rendered bonds obsolete. In contrast, investable companies “will typically find a way to cope with financial instability as long as their products and services are desired by the public,” Buffett wrote.
In fact, from January 1975 to January 2026, the S&P 500 rose nearly 6,700%, compared to a 524% rise in the Consumer Price Index, according to data analyzed by Charles Schwab.
In general, Buffett has encouraged investors to invest regularly over the long term in a broadly diversified manner. “Continually buying low-cost index funds in the S&P 500. I think that virtually always makes the most sense,” Buffett told CNBC in 2017.
But since no one (not even Buffett) knows what will happen in the short term, some cash is still essential. “I may have read every book in the public library, but at the time I couldn’t find the answer to the question of what the stock market was going to do next week, next month, 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, if an emergency arises, like a job loss or a sudden medical expense, you can safely get the rest of your financial life back on track.
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