From the course: Managing Your Personal Investments

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Cash and equivalents in your portfolio

Cash and equivalents in your portfolio

From the course: Managing Your Personal Investments

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Cash and equivalents in your portfolio

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- You know that expression it's like money in the bank? It's an expression of surety, of guarantee, a sure thing. As a reference to safety, the expression works well. Money in the bank is very safe, but what about using bank accounts as a way to invest? I'll cut to the chase and tell you straight out that money held in bank accounts is a terrible investment idea. Between fees and low interest rates, keeping money in the bank is a great way to not make money. Cash in the bank is great 'cause it's safe and easy to get at. This easy to get at part is called liquidity. You can access your money by ATM, check, wire transfer, ACH, bank teller, PayPal, Venmo but because banks pay such low interest rates right now, you should keep only a minimum amount of money in your bank account. Try to keep two to three months of expenses in the bank. This will give you enough cash to weather any bumps in the road and have a large enough…

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