Three reasons why cash is king

To most investors, cash isn't an asset class like stocks or bonds, it's a means of exchange. That's not a surprising way to think, but it is mistaken. Even if returns on cash are low, it still makes sense to hold at least some. Tim Bennett outlines three very good reasons why.

Is cash an investment? Many investors might say no it's just a means of exchange. But they're wrong, says Socit Gnrale's Dylan Grice. "As an asset class, cash doesn't get the attention it deserves." Perhaps this is no surprise. Textbook investing is all about accepting risk to achieve a decent return who wants to invest in a dead asset that offers a zero expected real return (taking inflation into account)? But right now there are three good reasons to hold at least some cash.

1. Valuation risk

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Tim graduated with a history degree from Cambridge University in 1989 and, after a year of travelling, joined the financial services firm Ernst and Young in 1990, qualifying as a chartered accountant in 1994.

He then moved into financial markets training, designing and running a variety of courses at graduate level and beyond for a range of organisations including the Securities and Investment Institute and UBS. He joined MoneyWeek in 2007.