Cash Investments
Cash is considered the safest asset class because you can always expect a positive return, which makes it relatively risk free. There is still risk that the bank or building society you invest with could fail, but the Australian Federal Government guarantees all bank accounts holding less than $1 million.
Cash investment gives the investor great liquidity which is invaluable when you need emergency funds, or other investments don’t perform as you hoped. Although cash investment may not provide the long-term growth of other asset classes, it does provide a great level of diversification to an investor’s portfolio.
Cash investment can be across products such as everyday transaction accounts, cash management accounts, at-call online high-interest accounts and term deposits of 6 months or less.
Cash investments are not suitable for long-term financial goals, such as comfortable retirement as they offer low returns in the long run. However, for short term financial goals such as holidays and smaller purchase goals, they can be a great way to grow your cash.
