U.S. Bank on Your Company's Cash
U.S. Bank asks, "How Are You Managing Your Company's Cash?" The posting says, "Although a robust cash balance is likely a sign that your company is doing well, having too much excess cash might signal ineffective cash management.... When searching for your organization's excess cash solution, it's important to consider the security, liquidity and interest rates of each investment option. Here, we'll explore several vehicles that can contribute to a diverse and productive portfolio suiting your institution's needs." The article says about MMDAs, "Money market deposit accounts (MMDAs) are a popular option for organizations looking to invest excess cash on a short-term basis, as deposits gain interest and are fairly easy to access. Further, MMDA investments are FDIC insured -- backed by the U.S. government -- up to $250,000.... If immediate liquidity with no market risk is your greatest concern, MMDAs might be a top option. MMDAs have the latest cutoff time for deposits, transfers and payments." It also says, "Money market funds -- often called money market mutual funds -- offer high liquidity with a relatively low level of risk. With money market funds, you're investing in a diverse pool of securities and spreading risk across a mix of Treasurys, CDs and other instruments, such as repurchase agreements (repos) and commercial paper. However, money market funds are not FDIC insured, so they're considered slightly riskier than their MMDA counterpart but do diversify concentration risk." Finally, the piece adds, "If you're looking to invest cash conservatively for a slightly longer tenor, you may want to consider Treasury bills. These securities have the full faith and credit of the U.S. government backing them, so there's little risk of losing your initial investment when held to maturity. Additionally, there are various term options available for Treasury bills. This means, with a bit of planning, you can decide whether shorter or longer bill duration fits your situation."
