Cash Investing

What is cash?

The word "Cash" is used here meaning any form of money that can be withdrawn quickly, such as money in a checking or savings account. It could even be Gold or in other traded commodities, that have a standard trading rate. (Think: ‘No appraisal.’) Money Market accounts have the highest rate of return for ‘cash’ at around 1.5-2% annually, but usually there has to be a large deposit made to qualify for that percentage. It is also not guaranteed to grow.

To properly diversify your portfolio, it is good to have between 2% and 5% in cash for emergency access to your money. That way it all still grows, but you have a means of immediate withdrawal for some of your investment.

Pros of Cash Investing

Fast withdrawal, completely safe.

Cons of Cash Investing

Can't possibly earn more than 1 1/2% to 2% interest. Also, that interest rate can sometimes drop at your bank's will. And by the way, do you think a safe 2% interest rate is good enough for all of your savings?

Then think about the effect of inflation, which will utterly destroy it at it's current average of 3% per year! (This, by the way, is the primary reason that it is necessary to invest these days.)