2006-12-01 09:34:19 · 7 answers · asked by Homer Simpson 1 in Business & Finance ➔ Investing
just asking cuz i see alot of mutual funds say that they are 80% in stocks and 20 % in cash it makes no sense why cash is an investment
2006-12-01 09:52:52 · update #1
Cash by itself is not an investment, but I disagree with the answerer that said that CD's and Money Markets are not investments.
The generally accepted definition of an investment is when money is put to use for a profit. CD's and Money Markets certainly qualify in that respect.
When mutual funds say they have a percent in cash, it is actually invested in the money market, treasury bonds or another investment vehicle that has no risk.
2006-12-01 09:51:44 · answer #1 · answered by rkoblitz 6 · 1⤊ 0⤋
I think most mutual funds hold onto a certain amount of cash for 2 reasons : first if people start selling their fund, they need to have some cash on hand. Also, if an investing bargain suddenly comes along, they have cash on hand to make a purchase.
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2006-12-01 20:32:08 · answer #2 · answered by Anonymous · 0⤊ 0⤋
Cash is an investment in the sense that it earns interest sitting in a bank. However, the return on your investment without assuming any risk will likely be minimal. Over time your cash will not grow fast enough to outpace the rate of inflation. This is why it's important to invest your money. Inflation will eat it all up if left sitting in the bank. Given the recent interest rate hikes, there are reasons to keep your money in cash as the banks are paying around 4-5 percent return on it. However, if you are looking to invest in stock, see http://ibooyah.com investment matters for some ideas. Good Luck!
2006-12-01 18:36:54 · answer #3 · answered by buklao 3 · 0⤊ 0⤋
I can't believe all of you are not describing inflation....unless I missed it in my quick scan.
If your government is printing money you have inflation by definition.
The symptom of inflation is loss of purchase power of your cash. Therefore if cash is in money market or CD it may be called an investment. However, if it doesn't beat inflationary loss of purchase power, I'd call it a very poor investment. And the government post of CPI is a poor measure of true inflation since most of our dollars transfer manufacturing bases such as China, and Malaysia. When these countries decide to diversify their currency holdings, all in the US will see the true wrath of inflation, and will loathe their choices if they choose to tuck it into CD's or money market 'investments'. You have to diversify. And by that I don't mean lots of different stocks. You have to include gold / silver too. And, I think some foreign treasury bills or currency aren't a bad idea right now.
2006-12-01 22:14:42 · answer #4 · answered by Ryan W 2 · 0⤊ 0⤋
Cash by itself isn't an investment. CDs and Money Markets are not investments. If there is no risk, its not an investment.
2006-12-01 17:41:49 · answer #5 · answered by Anonymous · 0⤊ 0⤋
If the markets are in decline, having your assets in cash, even with no return, can be a positive, at least you're not losing.
And when you decide the market is at the bottom, you have the cash to jump back in with.
2006-12-01 17:42:52 · answer #6 · answered by Anonymous · 0⤊ 0⤋
Please click on http://www.4xmoneytrain.com
2006-12-01 18:21:27 · answer #7 · answered by Anonymous · 0⤊ 2⤋