13 Reasons Why Cash Is King for Stock Market Investors

Disclaimer: This article has been published Strictly for educational purposes only. Nothing mentioned in this article should be considered as investment advice. Trading is inherently risky and readers should therefore agree to assume complete and full responsibility for the outcomes of all trading decisions that they make, including but not limited to loss of capital. Hence, we once again humbly request our dearest readers to do complete research at your end too, please.


The Bombay Stock Exchange or Sensex is one of India’s most-followed stock indices. It has been tracking changes in financial markets around the world since its inception decades ago. It’s no surprise why this would be an appropriate indicator when we see what happens with other country economies during times like these. When inflation rates spike due to currency fluctuations (which happened recently); political instability across several countries; the unprecedented pandemic; and the ongoing Russian-Ukrainian war can all be causing major dips in the market.

Stock market volatility is not new or surprising. This is why despite the current downturn, a lot of Indian investors believe that the stock market will rebound in the future. They are holding on to their stocks and waiting for the market to recover. Furthermore, many Indian companies are doing well financially and continue to pay dividends to their owners. For these reasons, wherever you are or whatever strategies you are using to try and make money. Whether it is in the purchase and sale of stocks, bonds, mutual funds, or more complex methods such as derivatives or options. One of the most important things to remember regardless of what tactic you’re using is that cash is king.

Important Reasons Why Having Cash Is Powerful

1.    Cash is a safe investment

It’s always there when you need it and it doesn’t have any hidden risks. It can provide a buffer against stock market volatility and protect your investment from losses. Cash is king for stock market investors and it should be a part of every investor’s portfolio.

2.    Cash is liquid

You can easily convert it into other investments or use it to pay for expenses if needed. This flexibility can be helpful in several situations, such as when you need to rebalance your assets or take advantage of opportunities in the market.

3.    Cash is tax-efficient

You can hold cash in a variety of investment accounts and you won’t have to pay any taxes on the income it generates. This can be helpful if you’re looking for ways to reduce your tax bill. Making your money works for you without government intervention.

4.    Cash doesn’t require a lot of maintenance

Once you’ve invested in cash, you don’t need to do anything else. This is in contrast to other investments, which may require you to monitor them regularly or make changes to keep them performing well.

5.    Cash can provide peace of mind

Given the volatile nature of the stock market, some investors find it comforting to have a portion of their portfolio in cash. This can help you sleep better at night knowing that you have some money set aside in a safe investment.

6.    Cash can be used to diversify your portfolio

By investing in a mix of asset classes, you can reduce your overall risk. Cash can operate as a stabilizing influence in your asset class because it is less risky than equities.

7.    Cash is easy to understand.

Unlike some other investment options, cash is straightforward and doesn’t require a lot of technical knowledge to understand. This can be helpful for investors who are just starting or don’t have a lot of experience with the stock market.

8.    Cash provides security.

In a volatile market, cash can be a haven. This is because it’s one of the least risky investments available and it is always available when you need it. When the stock market is in turmoil, having cash on hand might mean the difference between losing and protecting your capital.

9.    Cash can be a source of income.

If you need to generate some extra cash flow, you can always sell some of your cash holdings. This is a simple way to obtain funds when you need them without having to sell other investments. This is explained well on many summarized online videos available on various media platforms that provide comprehensive information about finances.

10.  Cash can be used to buy investments on sale.

When the stock market crashes, you’ll have the opportunity to pick up bargains. You can take advantage of these opportunities and buy stocks at a discount if you have cash on hand.

11.  Cash can help you stay disciplined.

It’s easy to get caught up in the stock market’s euphoria and make impulsive decisions. However, if you have cash in your portfolio, you are less likely to make reckless judgments and are more inclined to stick to your investment strategy.

12.  Cash is low-risk.

Since you’re not invested in the stock market, you won’t have to worry about losing money if the market crashes. This can give you some peace of mind, knowing that your investment is safe.

13.  Cash can be a stepping stone to other investments.

Once you’ve saved up some cash, you can use it to buy other types of investments, such as stocks, bonds, or real estate. This can be a helpful way to get started in the stock market and build your basket of financial assets.

Cash is Still King!

Once upon a time, everyone thought that cash was king. But then something happened. The stock market crashed and people started losing money. A lot of people. Some experts are saying that cash is no longer king, that we should invest our money in stocks and other things that will make us money. So what’s the truth?

Well, honestly, it depends on what you need. Investing in stocks is one of the most effective ways to make a lot of money quickly. But if you want to be safe and not lose all your money, then the cash is still king.

Some people believe that you should always keep cash on hand in case anything unexpected happens. Others feel that you should invest all of your money and keep no cash on hand. But, in reality, it is entirely up to you. You should do whatever feels good and comfortable to you.

So, what do you think? Is cash king or not? Let us know in the comments below!


Hope you found the post informative and useful . We so look forward to reading your feedback in the comments section.

You may also love to read : 

Rich Dad Poor Dad – A book finding relevance even after 20 years

Buying And Selling Stocks: 6 Steps Beginners Guide


Lets catch up at Insta : Inside Out with Rahul Yuvi or simply Google – Inside Out with Rahul Yuvi

Till then , Namaste, take care !

Photo Credits : Various Respected creative souls at Unsplash & Pixabay


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