Idle cash: What it is and what you can do with it

Idle cash is money that is not invested, used for living expenses or set aside for specific upcoming purchases. Due to factors such as inflation and rising costs of goods and services, cash that is not exposed to upside or used to gain yield is lost potential. 

It’s important to ensure that you or your family has enough cash set aside should an emergency arise. However, having cash in excess of an emergency fund or living expenses could be counterintuitive to reaching your financial goals.

What should I do with my idle cash?

The first thing to consider is what your goals are. Are you saving for a house, a car or a child’s education? Perhaps you simply want to put money away for an upcoming vacation. Once you have an idea of your goals, you can decide how to purpose your idle cash.

There are a variety of options when considering where to put your idle cash to work, but they all depend on your goals. For example, idle cash for longer-term goals, such as a new child’s education or retirement, could handle greater exposure to risk, whereas shorter-term goals may be more risk-averse. It is always wise to consult a financial advisor to ensure your investment choices are aligned with your goals.

When is the best time to invest idle cash?

The sooner the better! One of the most important concepts to understand when it comes to investing is that time in the market is better than timing the market. In other words, those that get invested sooner and stay invested longer are almost always better off than those who try to time market movements. So, again, when it comes to your idle cash, the sooner it is put to work, the better.

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