Importance of Cash in Investment Portfolio
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Questions and Answers

Why is cash considered essential in an investment portfolio?

Cash is essential for liquidity needs and emergency funds.

What does liquidity refer to in the context of investments?

Liquidity refers to the ease with which an asset can be converted into cash quickly, reliably, and relatively cheaply.

How does holding excessive cash impact an investment portfolio?

Holding excessive cash can lead to negative real returns.

What is the Financial Services Compensation Scheme, and how does it benefit retail investors?

<p>The Financial Services Compensation Scheme covers retail investors.</p> Signup and view all the answers

Why is it difficult to achieve positive real returns with cash investments?

<p>Difficult to achieve positive real returns due to low-interest rates.</p> Signup and view all the answers

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