Financial Literacy Month Basics – Cash and cash equivalents

Our Financial Literacy Month blogs about investing basics continue this week with a look at cash and cash equivalents.

Cash and cash equivalents are a specific type of asset class that include cash on hand typically in a savings account, and securities that are similar to cash. These securities are highly liquid, low risk, and offer relatively low rates of return when compared to other types of investments. Due to these characteristics cash and cash equivalents are short-term investments.

Some of the investments that typically fall under the cash and cash equivalents heading include:

Treasury Bills

Guaranteed Investment Certificates (GICs)

Money Market Mutual Funds

Before making any investment always make sure it fits your investment goals and risk tolerance. While investing for retirement is important, make sure you properly balance the investments you’re making and your risk to ensure it does not negatively affect your current standard of living and put you on the right path to reach your financial goals.