What is a cash investment?

Investments in cash are obligations that are mature in a relatively short period of time. The advantage of these types of investment is that it is possible to return without the need to commit funds for a longer period of time. In general, cash investment reaches a maturity within three to six months, although some may require one calendar year.

cash investments can usually be used with relatively small efforts. This factor makes an investment of this type ideal for anyone who needs to quickly transfer cash investment for an emergency situation. While some cash investments can bear a small punishment for early withdrawal, others have no sanctions at all.

While cash investments can have several forms, there are three that tend to be the most common. One example is the funds of the cash market. With the money market account, fixed -income assets that support the fund, generally low risk and create a small but stable return. Account also hajeA high level of liquidity, which is ideal for use as a source of emergency or standby funds.

Another example of a cash investment is a bank account that carries interest. Banks are increasingly offering savings accounts that do not have any sanctions for early download, while still offering a competitive interest rate. Some banks offer a slightly higher interest rate if the account balance remains at a certain level. Funds in this type of cash investment are again available if there is an unexpected situation.

short -term deposit certificates, also known as CD, are the third example of a cash investment. Today it is possible to open a deposit certificate with a due date of only three months. In general, a CD of this type carries a fixed interest rate, although there are some institutions that also offer flating or variable rate with this investment option.

there is a certain divisionIt is in views whether the problem with the short -term bond can be correctly classified as a cash investment, even if the bond is renowned in twelve months or less. The main objection seems that the withdrawal from an early problem is not generally a simple process and often includes the sale of a bond to obtain the original investment and any interest to this point. Others feel that if a short -term bond matures within six months to a year, it still meets the basic criteria as a cash investment, although in the event of a financial crisis it may take a little more effort.