Investment Management

Options to Consider for Cash Investments

Cash is an asset class that may be overlooked. However, we believe it plays a key role in the overall diversification of a portfolio. Now that the U.S. is moving out of a 0% interest rate environment, investors may earn meaningful interest on their cash positions.

There are a Few Options to Consider for Cash Investments

  • Interest-bearing savings account can be used for cash that has been set aside for an emergency fund. Savings accounts may not offer the highest yield available, but the cash is liquid and easy to access. If the savings account is with an FDIC-insured bank, up to $250,000 per depositor is insured against loss.
  • A purchased money fund is another common vehicle for cash investments. These are mutual funds that invest primarily in high-quality, short-term debt securities, such as U.S. Treasuries, CDs, and commercial paper. Due to the underlying investments, purchased money funds may offer a higher yield than savings accounts. Purchased money funds are not FDIC insured and it may take a day to access the cash since these funds are bought and sold on the open market.
  • Certificates of Deposit (CDs) are savings accounts offered by banks that offer investors a fixed rate of return in exchange for locking the funds in the CD for a set period, generally between three months and five years. Because funds are invested until their maturity date, the yield on CDs is generally higher than those of savings accounts. CDs from FDIC-insured banks are also insured against loss. An early withdrawal penalty may apply if an investor withdraws funds prior to the CD’s maturity.
  • S. Treasuries are fixed income (bond) instruments and are not the same as investing in the three cash and cash equivalent vehicles mentioned above. However, Treasuries do offer some of the same benefits. Treasuries can have varying maturities and an investor’s yield is guaranteed for that period. Treasuries are not FDIC insured, but they are backed by the U.S. government.

We think cash is an important asset class to have in any investment portfolio and the utilization of that cash should be managed according to an individual investor’s risk tolerance and portfolio objectives. At Schultz Financial Group, we consider an investor’s cash needs, risk tolerance, liquidity, and portfolio objectives in order to help proactively manage a client’s cash position. 

  • Schultz Financial Group, Inc. (“SFG”) which is a registered investment adviser, drafted this blog post for its website and for the use of its clients or potential clients. Any other distribution of this blog post is strictly prohibited. Registration as an investment adviser is not an endorsement by securities regulators and does not imply that SFG has attained a certain level of skill, training, or ability. While the content presented is believed to be factual and up to date, it is based on information obtained from a variety of sources. SFG believes this information is reliable, however, it has not necessarily been independently verified. SFG does not guarantee the complete accuracy of all data in this blog post, and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of SFG as of the date of publication and are subject to change. This blog post does not constitute personalized advice from SFG or its affiliated investment professionals, or a solicitation to execute specific securities transactions. SFG is not a law firm and does not intend for any content to be construed as legal advice. Readers should not use any of this content as the sole basis for any investment, financial planning, tax, legal or other decisions. Rather, SFG recommends that readers consult SFG and their other professional advisers (including their lawyers and accountants) and consider independent due diligence before implementing any of the options directly or indirectly referenced in this blog post. Past performance does not guarantee future results. All investment strategies have the potential for profit or loss, and different investments and types of investments involve varying degrees of risk. There can be no assurance that the future performance of any specific investment or investment strategy, including those undertaken or recommended by SFG, will be profitable or equal any historical performance level. Any index performance data directly or indirectly referenced in this blog post is based on data from the respective copyright holders, trademark holders, or publication/distribution right owners of each index. The indexes do not reflect the deduction of transaction fees, custodial charges, or management fees, which would decrease historical performance results. Indexes are unmanaged, and investors cannot invest directly in an index. Additional information about SFG, including its Form ADV Part 2A describing its services, fees, and applicable conflicts of interest and Form CRS is available upon request and at