Cash for liquidity
March 2009
While cash is used principally to provide much needed liquidity in an actively managed investment strategy, there are times when it comes into its own.
The modest returns from the average high interest current account are surely preferable to the negative growth displayed by the UK stockmarket from time to time.
Over the long term, other asset classes can be expected to outperform cash. For most people, the biggest advantage of cash is its flexibility. You can usually get your hands on your money when you need it.
The greatest drawback for savers, over the long term, is inflation. It can seriously eat into the real value of your money and you could find you can’t buy nearly as much as you’d thought when you started out. See our features, The future value of money and What is risk?, for more.
