State of Iowa

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Cash investment choices

Cash investments are a conservative choice for shorter time periods




Cash investments are liquid, relatively safe and have shorter investment periods.

Traditional checking and savings accounts at banks and credit unions are the most common. They offer guarantee of principal (FDIC insurance up to a certain amount) but earn low or no interest. Other cash-based types include:

Certificates of deposit (CDs)
Certificates or short-term obligations of banks, savings and loans, or other financial institutions usually range from three months to five years. Only CDs with maturities six months or less should be considered liquid.
Treasury bills
These short-term debt instruments are issued by the U.S. Treasury, purchased at a discount and mature in one year or less. For example, if you purchase a $1,000 26-week T-bill for $975 you would get $1,000 when it matures in 26 weeks.
Savings bonds
Issued by the U.S. government, the different kinds of savings bonds are E, EE, H and I. Face values range from $50 (EE bonds) to $10,000 (H bonds). Some savings bonds are purchased at half the face value and mature at face value. Maturity dates depend on the rates of interest during the holding period.
Money market funds
These mutual funds invest solely in short-term debt instruments. They can be converted quickly to cash, may offer features such as check writing and are considered conservative because the variety of assets they invest in is limited.

An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. While the fund seeks to preserve the value of your investment at $1 per share, it is possible to lose money while investing in the fund. Don't confuse money market funds with bank money market accounts.

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