Excess cash in your brokerage should be put into a money market fund. For example, at Schwab you can use [SWVXX](https://www.schwabassetmanagement.com/products/swvxx). The key point is many brokerages won't automatically sweep to this for you, so it requires you to do trades. SGOV and BIL are other good ETFs for this. You can find good money market funds at [Yieldfinder](https://yieldfinder.app/money_markets).
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If you don't do this yourself, your brokerage will love your idle cash sitting around which they will use to invest and earn them, and not you, money. I generally hold very little cash because inflation quickly eats into its value. I'd rather put that money to better use. This brings me to the next point: putting capital to its best use.
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If you don't do this yourself, your brokerage will love your idle cash sitting around which they will use to invest and earn them, and not you, money. I generally hold very little cash because inflation quickly eats into its value. I'd rather put that money to better use.
## Rebalancing
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Only the first two cases involve actually owning shares. For derivatives, it is not too important whether you end up with shares or not, as the P/L will be similar to owning the exposed amount. They also have expirations, but you can continually roll them to future dates to simulate a buy and hold.
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## General investing goal
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I take the idea of having an diversified portfolio and just add leverage to it. In other words, I keep the same desired percentages of each category, and use the notional value of derivatives to represent to amount invested in that category. The diversified portfolio I follow is a target date fund, such as [SWYGX](https://www.schwabassetmanagement.com/resource/swygx-fact-sheet). As these percentages change over time, I do rebalancing taking into account the leverage I'm using.
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## Leverage
Adding leverage increases your risk, but increased risk is one way to possibly gain better returns. There are many ways to gain leverage, from using loans, to options, to futures.