Generally people prefer to stay invested to the full extent, but that is very dangerous from two counts. First, it does not give you the opportunity to exploit any extraordinary buying opportunity for any equity or gold or any commodity, or even any property.
Second, you may not be able to meet any unexpected medical or any other household related spending that might crop up without any notice. Without adequate cash, you may be forced to go for high interest rate short term borrowing, while your cash invested in temporary assets might be yielding far less amount.
So , as a golden rule, always carry around 5% to 10% of your total asset in cash and liquid asset form which can be converted into cash anytime.