Comments on: Cash is an Investment Category

By: FinancialJungle

FinancialJungle — Sun, 06 Jan 2008 02:35:25 +0000

Consider paying down part of your mortgage with your non-registered cash. While you’re waiting for the right investment opportunity to come along, your cash is “earning” tax-free income due to the interest saving.

When investment opportunities present themselves, borrow from your HELOC and enjoy the tax-deductibility of an investment loan.

By: admin

admin — Thu, 03 Jan 2008 23:57:15 +0000

GI- I think the statistic I read is that money loses 50% of its value every 30 years due to inflation. As WhereDoesAllMyMoneyGo suggested, I put my money in high interest accounts which at least keep up with inflation.

BNS is a good stock but I am over-weighed in banks already so I wouldn’t add any more positions in banks. Good pick!

By: moneygardener (AKA investor99)

moneygardener (AKA investor99) — Thu, 03 Jan 2008 23:48:17 +0000

I understand the feeling TMW.

I am trying to think of cash as an investment as well.

The thing that bothers me is cash does not yield, like good dividend paying stock do. If I want to see my income/year rise I need to buy, but that is the wrong attitude to have…

By: WhereDoesAllMyMoneyGo.com

WhereDoesAllMyMoneyGo.com — Thu, 03 Jan 2008 21:24:51 +0000

I have some clients as much as 55% cash right now. If we can’t find something we are confident in, we will sit on cash. Dundee’s ISA is paying 4.1% (4.3% F-class) – so something has to be pretty compelling to beat a guaranteed, totally liquid 4+%.

Having said that, I’m probably going to initiate some more buys into BNS – the yield is healthy – after-tax it will beat the cash and they just raised their dividend. They seem relatively unscathed compared to the other banks wrt the ABCP and US subprime exposure. However, can’t add any more than 5% positions since it will violate our IPS. (Disclosure: I work for a division of BNS and own the stock personally).

By: GI

GI — Thu, 03 Jan 2008 20:37:39 +0000

Having your assets in cash is great if you can’t see an investment that you think is a good one. Personally however I believe there is always an outstanding investment out there somewhere. If you don’t see it you just aren’t looking in the right places!

And don’t forget about inflation. Some experts claim that the real rate of inflation has been depreciating the dollar by 90% every 30 years. So if you aren’t making good money with your money you are losing it to inflation big time!

By: White Eagle

White Eagle — Thu, 03 Jan 2008 18:01:48 +0000

CC is right… if you don’t feel comfortable investing a particular stock at these levels, don’t do it.

I’m currently at around 85% cash. I might be missing out on some quick cash but at least I can sleep at night.

By: admin

admin — Thu, 03 Jan 2008 13:43:43 +0000

Thanks for all your comments. I once read an article about a value investor who said he bought once a year (if that). I guess the key is not to be mad with your money.

By: Canadian Capitalist

Canadian Capitalist — Thu, 03 Jan 2008 13:32:47 +0000

It’s very hard to patiently wait for the right opportunity. Wasn’t it Buffet’s partner Charlie Munger who said that half the world’s troubles are due to an inability to sit on its ass? If you can’t find anything to buy, you’re doing the right thing by sitting tight.

Me, I’m hoping to get some opportunities to buy in emerging markets (I refuse to pay developed market multiples for emerging markets), REITs and real-return bonds.

By: TKO from Ontario

TKO from Ontario — Thu, 03 Jan 2008 11:18:20 +0000

And I thought cash was burning a hole in my pocket.

Bless your heart for pointing out Francis Chou sitting on 39% cash in his flagship fund. You’re also right about the 12 P/E Ratio.

Bring on the deals baby.

By: tom venner

tom venner — Thu, 03 Jan 2008 11:07:29 +0000

I’m usually between 15-20% cash, don’t see a problem with it.