What does it mean to invest in cash?

What does it mean to invest in cash?

A lot of financial articles say remember to invest some of your money into cash. What does this mean? CDs? MoneyMarket Accounts? Commercial Paper? Tbills? What does the term cash mean? I got it from this reading: Another option is to anchor the emergingmarket portfolio with another less volatile asset class. That means taking 50 of the money youve earmarked for emerging markets and putting it into CASH. The other half goes into an emergingmarket index fund or exchangetraded fund. PLEASE HELP

Asked by DartL about Investing

Cash those paper and coin currency. To be in cash means you are holding cash not stocks not bonds not tractors etc. Cash equivalents are things that can be easily converted to cash and are as good as cash from a risk standpoint. examples of cash equivalents: http://en.wikipedia.org/wiki/Cashandcashequivalents money market Bank CDs U.S. Treasury bills notes and bonds. short term commercial paper What are NOT cash equivalents: stocks corporate bonds pretty much everything else Keeping some money in cash reserve is a good idea as it allows one to make purchases during unique situations in the markets or use dollar cost average opportunities. Long term cash is a poor investment because it earns little interest relative to all other asset classes. There is a time to be in cash July 2007 to March 2009 and a time to be in the market too many dates to discuss. Knowing how and when to allocate buy and sell is what makes a market.

Answered by Net Advisor

When they say cash they usually mean cash and cash equivalents. These are: money market short term bank CDs U.S. Treasury bills. short term commercial paper Technically cash only means coins and paper money but few people in the financial world mean this when they say cash.

Answered by The Edit My Answer Prophet

Yes thats what investing in cash means. Usually cash deposits like money markets savings accounts and CDs.

Answered by Matt