Cash Drag

Cash held inside a brokerage account earns the sweep rate, which is often well below what the same balance would earn in the portfolio it is sitting next to. The difference between those two rates, applied to the idle balance, is the drag.

A high cash percentage is not automatically a problem. It is expected while a purchase is pending, during a rebalance, or where a deliberate buffer is being held. It becomes worth noticing when nobody can say which of those it is.

The arithmetic is modest per year and compounds like everything else here. $10,000 idle against a 7% alternative gives up around $700 in the first year and roughly $9,700 over a decade, since the forgone amount would itself have been compounding.