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12 WHY ARE YOU HOLDING CASH I t is essential to understand why you are holding cash before you can determine where and in what form you wish to hold it. Some Cash You Hold for Liquidity Ongoing Local Transactions and Payments You hold cash in checking accounts in banks or credit unions or in your wallet to make ongoing payments in your day-to-day lives and businesses. You may pay with legal tender currency checks or ATM cards. Ongoing Online and Remote Payments You likely hold cash in online accounts in a bank or credit union or in an online payment service such as PayPal to make ongoing payments in your day-to-day lives and business. Some Cash You Hold for Financial Stability and Soundness Physical Cash Many of us keep physi- cal cash as part of our core position. This can be held at home often referred to as under the mattress close by or far away depending on what kind of a rainy day or emergency you are prepared to handle including disaster recovery. If you are con- cerned about the stability of the financial system you may want to hold cash out- side the banking and brokerage system. If you are concerned about privacy you may prefer to transact with cash. If you are concerned about the value of the fiat currency in your jurisdiction this stash may be kept in other fiat currencies or in gold and silver which may fluctuate in value relative to your home currency. Recent efforts by governments to reduce Legal Tender httpsen.wikipedia.orgwikiLegal_tender Fiat currency httpsen.wikipedia.orgwikiFiat_money Foreign exchange risk httpsen.wikipedia.orgwikiForeign_exchange_risk Market risk httpsen.wikipedia.orgwikiMarket_risk Interest rate risk httpsen.wikipedia.orgwikiInterest_rate_risk Credit risk httpsen.wikipedia.orgwikiCredit_risk Liquidity risk httpsen.wikipedia.orgwikiLiquidity_risk Deflation httpsen.wikipedia.orgwikiDeflation Principal httpsen.wikipedia.orgwikiBond_financePrincipal Return of capital httpsen.wikipedia.orgwikiReturn_of_capital Return on capital httpsen.wikipedia.orgwikiReturn_on_capital Cash management httpsen.wikipedia.orgwikiCash_management Investment management httpsen.wikipedia.orgwikiInvestment_management I. Options For Stashing Cash