One objective of cash equivalents is to protect your investment. Their values do not fluctuate as much as equity or fixed-income securities. For this reason, cash equivalent securities are a good place to put emergency funds or to park money for the short term. Since they offer little growth potential, investments in cash equivalents probably won't protect your assets against inflation. Therefore, they probably shouldn't be used as the primary investment for building your retirement.
Past performance is no guarantee of future results.
Certificates of deposit are insured and offer a fixed rate of return, whereas both the principal and yield of investment securities will fluctuate. All Rights Reserved. Privacy Policy and Licensing Information .