, an educational organization dedicated to promoting financial and investment literacy, teaches individuals how to be successful investors and achieve their long-term financial and retirement goals. Our purpose is to inform, educate, and motivate you to achieve your savings and investment goals. We do not sell any investments or financial products.
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   Goal Setting
      Spending and Debt
      Savings and Investing
      Retirement Goals
      Setting a Retirement Date
   Principles For
      Successful Investing

      Understanding Fear and
      Risk Tolerance
      Asset Allocation
      Types of Investments
         Cash Equivalents
         Equities - Stocks
         Fixed Income
         Mutual Funds
         Other Investments
      Risks Investors Face
      Rebalancing Your Portfolio
   Cash Flow Analysis
   Balance Sheet
   Preparing A Budget
   Issues When Opening An
      Investment Account
Cash Equivalents

Cash equivalent is a financial term used to describe deposits in liquid accounts - readily available - that do not fluctuate in absolute dollar value. These accounts can be considered the same as cash in your pocket. Cash equivalent accounts have very short-term holding periods, ranging from 0 days to 90 days. Because of their liquidity, they usually earn the lowest rate of interest, if any.

From an investor’s perspective, cash equivalents are -

  • Checking or savings accounts.
  • Money market accounts.
  • Short-term securities maturing within 90 days - CDs, Treasury Bills.

Advantages of cash equivalents -

  • Liquid - readily convertible into cash.
  • Maintains absolute dollar value.
  • Useful for money needed in the short-term; paying of bills and anticipated near-term obligations.
  • Convenient account to park money for future investment commitments.

Disadvantages of cash equivalents -

  • Usually does not earn enough interest to keep up with inflation; declines in relative value to general prices of goods and services.

Also, see Asset Allocation.

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Investing for Retirement - Surviving a Financial Tsunami by John Benson
San Antonio TX

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A step-by-step guide to goal setting and implementation of an Investing for Retirement plan. How to be a successful investor and the mistakes to avoid.

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