Risks of Excess Cash
Investors took advantage of higher interest rates in the aftermath of 2022’s bear market. Assets in money market funds soared to nearly $6 trillion at the end of 2023.
For investors, cash became a great place to park savings and earn roughly 5% interest. With cash accounts and related investments providing competitive yields not seen in the last decade, it can give investors a false sense of security as a no-risk investment choice.
Cash is often the best option for meeting near-term spending needs. But before declaring cash is king, holding too much cash beyond emergency or near-term needs comes with risks as well.
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