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Cash Reserves - Short Term Investment

If you had 100K in cash reserves, what would you do with it to earn more than the money markets are paying but still stay as liquid as possible?

Answers

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

There is not much available that is extremely safe. One avenue is investing in short-term financing business, such as The Lending Club, but with investment comes risk, and even the most apparent risk-free option still has risk.

EMERSON GALFO
Title: CFO
Company: C-Suite Services
LinkedIn Profile
(CFO, C-Suite Services) |

For that amount and for liquidity, there are not much options. A sweep account (if you are not yet using it and the accompanying cost) would be your best bet.

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

Emerson,

Sweeps don't make any money. The interest rates either match or don't really exceed the costs... It's not worth it... any more...

EMERSON GALFO
Title: CFO
Company: C-Suite Services
LinkedIn Profile
(CFO, C-Suite Services) |

Wayne,

".....would be your best bet...to explore" :-D

There is just not much options for the amount and his liquidity constraint. Depending on the cash involved, their cash position and a longer time frame, I think it is still a better option (between two evils, the first one being non-interest bearing accounts).

Topic Expert
Patrick Dunne
Title: Chief Financial Officer
Company: Milk Source
(Chief Financial Officer, Milk Source) |

Before 2008, there were overnight bank deposits, ( I think they were called repos) which I think have disappeared since banks can now fail overnight. I believe there is an overnight commercial paper market, but you will want to talk to your bank on associated risk of this investment. You will also want to double check your lending agreements to see if you can use these.

John P. Hart
Title: Vice Pres - CFO
Company: Nova Pressroom Products, LLC
(Vice Pres - CFO, Nova Pressroom Products, LLC) |

Sweep to a ZBA in order to lower a credit line & short-term borrowing costs would be quite beneficial. 100k example by the OP indicates that they are likely SMB. Off setting 3-5% interest on 100k far better than earning basis points on a MMA deposit account.

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