Liquidity strategy for 2026 and beyond

As equity markets continue to hover near record levels, many investors and families are feeling a sense of optimism about their financial outlook. While that optimism may be warranted, the importance of maintaining a thoughtful liquidity strategy in addition to an investment portfolio should not be overlooked. For those who may not have a strategy already in place, recent market strength may be an opportunity to build liquidity for 2026 and beyond.

A liquidity strategy is a pool of easily accessible and generally low-risk assets, intended to serve as a practical buffer, enabling individuals and families to maintain their lifestyle and meet expenses through life’s transitions. By setting aside resources to cover both anticipated and unanticipated expenses, investors can create a cushion that allows them to navigate changes with greater confidence. Liquidity strategies are not intended to maximize returns; rather, they should provide stability and access to funds when needed, ensuring that decisions can be made thoughtfully rather than under pressure.

Outlined below are some of the major components and considerations of a well-executed liquidity strategy:

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For those in their working years

• Emergency fund: Maintain an emergency fund covering six to 12 months of expenses to provide reassurance during unforeseen events.

• Major expenditures: If you anticipate significant expenses — such as a home purchase — consider earmarking additional funds to cover these needs.

For those approaching or in retirement

• Liquidity buffer: Set aside three to five years of planned portfolio withdrawals. This helps support spending needs without requiring adjustments to your investment strategy in response to short-term market movements.

Building and maintaining your liquidity strategy

• Asset selection: Prioritize capital preservation. Savings accounts, money market funds, certificates of deposit (CDs), high-quality bonds, and access to low-interest borrowing can all play a role in providing necessary stability.

• Flexibility: When markets are strong and your financial plan supports it, consider setting aside additional funds for discretionary spending, such as travel or home improvements. Conversely, be prepared to delay or reduce certain expenses when prudent, helping to preserve other investment assets for the long term.

Regular review and updates
To ensure your liquidity strategy remains aligned with your goals and circumstances, follow these steps:

• Review annually: Set a reminder to review your liquidity strategy at least once a year.

• Update after major life events: Reassess your needs after significant changes, such as a new job, retirement, or major purchases.

• Checklist for review:

o Are your spending plans up to date?

o Have you anticipated any major expenses in the coming year?

o Does your liquidity buffer still cover the recommended period (six to 12 months for working individuals, three to five years for retirees)?

o Are your assets still appropriate for capital preservation?

• Family and advisor discussions: Open discussions with family members and your financial advisor can offer valuable perspective and support ongoing adaptation as circumstances change.

A well-considered liquidity strategy is less about predicting the future or reacting to the current market environment, and more about being prepared for any outcome. Through sound planning and regular review, you can help ensure your financial security and maintain the freedom to pursue your goals — regardless of what the market brings in 2026 and beyond. PJC

Lee Oleinick is a financial advisor with UBS Financial Services Inc. a subsidiary of UBS Group AG. Member FINRA/SIPC in 600 Grant Street, Suite 4650 Pittsburgh, PA 15219. The information contained in this article is not a solicitation to purchase or sell investments. Any information presented is general in nature and not intended to provide individually tailored investment advice. The strategies and/or investments referenced may not be suitable for all investors as the appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives. Investing involves risks and there is always the potential of losing money when you invest. The views expressed herein are those of the author and may not necessarily reflect the views of UBS Financial Services Inc. Neither UBS Financial Services Inc. nor its employees (including its financial advisors) provide tax or legal advice. You should consult with your legal counsel and/or your accountant or tax professional regarding the legal or tax implications of a particular suggestion, strategy or investment, including any estate planning strategies, before you invest or implement.