Is investing in shares appropriate for short term cash surpluses?

This topic has 3 replies, 2 voices, and was last updated 4 years ago by John Moffat.

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June 4, 2021 at 1:22 am #623019
ilham9089
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Hi sir, I am aware that in the notes you’ve written that a short term cash surplus can be invested in shares however in Question Flit Co part (c) the answer states that it is inappropriate to invest short term cash surpluses in shares and that a deposit account would be more appropriate.
June 4, 2021 at 7:47 am #623060
John Moffat
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It depends how short-term it is.
Short-term surpluses can certainly be invested in shares, but even investing in ‘blue chip’ shares carries risk, as I explain in my lectures.
The answer to Flit does not say that it is inappropriate, but that for such a short period it would rarely be suitable because of the risk and that a deposit account would be more sensible, and that is true.
June 5, 2021 at 1:49 am #623216
ilham9089
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That’s the answer written in my BPP kit sir but nonetheless, thank you for the explanation 🙂
June 5, 2021 at 9:21 am #623250
John Moffat
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You are welcome (and regardless of what the BPP answer says, the examiners answer says that ‘it would rarely be suitable’, which is not quite the same as ‘innappropriate’ 🙂 )
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