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Investment Dictionary


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Cash Investments

 

Cash investments are the safest investments over short-term period. Such investments include saving accounts, certificates of deposit, money market instruments (treasury bills, money market funds). The main criteria for cash investments should include absolute liquidity and the stability in price. 

 

Yet not every saving account may provide the highest liquidity and stability, as not every short-term bill (bond) can do that. The issuer of such bill (commercial paper) has to meet the highest credibility. While deposits may lose their value if bank is weak and the deposit is higher than the amount guaranteed by the government.

 

The true is that cash investments are the only ones that sustain their value during strong financial turmoil but the problem is that cash investments tend to lose their real value over long period because of inflation. Cash investment also can be assigned to short-term investments or safe investments.

 

 






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