Keep Your Cash… as Cash
In the happier market of last month, some financial managers chose to invest their company’s cash in bonds and bond funds, which usually yield better than money market accounts. Unfortunately, many of those bonds are now effectively illiquid, or have to be sold at a big loss. Yuck. Anytime you have less than 18 months runway of “cash,” Rob suggests that you keep 100% of it in money markets and let your business growth drive the returns. While earning interest is nice, the main goal should be to have the cash available at anytime.
For those who have the high class problem of >18 months runway, here’s a template Investment Policy
you may wish to review with your board before investing in anything with liquidity risk. The mantra is preservation of cash