According to a 2018 report by UBS and Campden Wealth, the world’s super rich had 7 percent of their portfolio in cash and near cash instruments.
So even though the rates have dropped, you still need to have some of your money in this asset class, particularly your emergency savings.
Apart from making cash available for unforeseen events, it also makes some cash available to grab so fantastic opportunities.
In general, these are low risk investments with tenures of less than one year. As such the returns are quite low. However, it is possible to get higher returns if you are placing money with non-bank financial institutions or a microfinance bank.
The investment options here include:
Traditional savings account with a commercial bank – This have the lowest return and are insured by the government to a certain level.
Online savings account – They have much higher yields and offered mostly by fintech startups. They mostly do not have any form of deposit insurance except for those affiliated with commercial banks.
Fixed deposit account with a commercial bank – This is a termed deposit account and the rates are negotiable depending on the size of the fund and the duration of the deposit.
Fixed deposit account with a microfinance bank – Same as fixed deposits with commercial banks but offered by microfinance banks. As such, they are higher risk given that Mfbs give unsecured loans.
Treasury Bills – Short term loans to the federal government.
Commercial Paper – Short-term borrowing by the biggest private companies. With tenures of less than 1-year. This has a minimum of N5 Million.
You can invest in any of these directly or through money market fund.