Hi! I’ve been curious about this for a while now, and have spent quite a bit of time reading research reports about it. After pouring through statistics and studies, I’ve decided to ask some entrepreneurs directly for input. So, here it goes. As an emerging business, where do you keep your cash reserves? In a bank savings account, in a money market fund, invested in equities (I imagine this is for larger businesses holding the reserves for longer periods of time), or somewhere else?
Equities don't seem to be a good place for cash reserves. If you want to be able to plan future hires or purchases for your business based on how much money you have available, putting your money in an investment that can lose substantial value in a short period of time doesn't seem like a smart thing to do. A stock market crash can happen pretty quickly.<p>Owning a business is a risky enough investment, so you don't want to compound the risk it by investing your cash reserves in someone else's businesses.<p>The same is true for individuals. You don't want to put the money for your kid's next-year's college tuition into stocks. You're going to need to have that money available whether the market goes up or down this year. Stocks are a good investment vehicle for the long-term, but risky in the short-term.