Think your bank savings, but on a much larger scale. With cash investments, your money is invested in a cash fund that generates interest. As the fund value increases, so too does your cash value.
- The amount of interest paid will vary.
- Although interest is quite modest, it will never be negative.
- Over time, the value of your money will be reduced by inflation, so £1 will be worth less in ten years than it is today.
Cash investments are typically used within a larger fund that is investing in different areas. It can be used to reduce the overall fund risks. But cash also plays its part in more complex strategies, typically moving money between cash and other forms of investment to actively manage risk.