Introduction to savings
is king. It's usually important to have a portfolio fat with stocks
and mutual funds, but when the market tanks, cash and bonds will
keep you from having to sell those stocks and funds before their
Whether you stash your cash in a bank, thrift or a
credit union, you have several savings vehicles from which to choose,
from plain vanilla statement savings accounts to certificates of
deposit and money market funds.
The benefit of maintaining a portion of your portfolio
in savings vehicles is liquidity, preservation of principal and,
with the exception of money market funds, guaranteed interest.
But the trade-off doesn't have to be a low rate of
return. Manage your choices for investing cash as carefully as you
manage the stock portion of your portfolio and your average interest
rate should beat inflation and taxes.
-- Updated: March 28, 2003