Cash and Cash Equivalents
Cash equivalents are safe, short-term, highly liquid investments that
are, as the name suggests, equivalents to cash.
Cash equivalents are excellent savings vehicles for short-term goals.
Here are a few examples:
- Money market funds. Technically a mutual fund, money market
funds strive to maintain a share price of $1 and usually provide higher
interest than typical savings accounts.
- Certificates of deposit (CDs). Also referred to as time accounts,
CDs provide a "locked" amount of interest for a specified period of
time. They are also FDIC insured.
9 of 10: Different Asset Classes
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