What is the reason behind holding cash?

[Mataracy]

When we are talking about cash that means money. Motives for holding cash ; the firm's need to hold cash may be attributed to the following three motives:
- The transactionary motivr
- The precautionary motive
- The speculative motive
TRANSACTIONARY MOTIVE: Cash is held yo meet anticipated payments in the ordinary course of business.
PRECAUTIONARY MOTIVE: Cash is held to meet unexpected cash obligations.The amount of cash held for this purpose would depend on the degree of accuracy if predicted cash flows and the organization's ability to borrow a short notice. Such cash should, preferably, be invested in highly liquid and low-risk marketable securities.
SPECULATIVE MOTIVE: cash is held for the purpose if investing in profitable investment opportunities as they arise.The test of liquidity is the availability of cash to meet the organisation's maturing obligations.
All these three motive are the reason for holding cash .And I need to here from you to.

 

[springtech]

When we are talking about cash that means money. Motives for holding cash ; the firm's need to hold cash may be attributed to the following three motives:

• The transactionary motivr
• The precautionary motive
• The speculative motive

TRANSACTIONARY MOTIVE: Cash is held yo meet anticipated payments in the ordinary course of business.
PRECAUTIONARY MOTIVE: Cash is held to meet unexpected cash obligations.The amount of cash held for this purpose would depend on the degree of accuracy if predicted cash flows and the organization's ability to borrow a short notice. Such cash should, preferably, be invested in highly liquid and low-risk marketable securities.
SPECULATIVE MOTIVE: cash is held for the purpose if investing in profitable investment opportunities as they arise.The test of liquidity is the availability of cash to meet the organisation's maturing obligations.
All these three motive are the reason for holding cash .And I need to here from you to.

Good details. This is basic economics. In economics we are made to understand in simple terms, that money is a means of exchange. It is a legal tender. Hence as a legal tender, we hold money basically to be able to make purchase of items we need, be it for use or consumption. And the truth is, need arises every time, from time to time and at any where, with money held in your hand you can meet your immediate need without feeling agitated or feeling under pressure. This goes to show the importance of holding cash. Imagine that feeling you have in an emergency situation where you urgently need cash but you have know readily available even though you have more than enough in the account.

 

[Psalmseen]

We hold cash mainly for some reasons. Lord Keynes postulated three reasons for holding money. They are
1. Transactionary motive
2. Precautionary motive
3. Speculative motive.
We hold money to meet up with our day to day running activities. That is for transactionary motive
We also hold money to meet up with unforseen contingencies. That is precautionary motive

 

[Syldan]

The Motives for Holding Cash is simple, the cash inflows and outflows are not well synchronized, i.e. sometimes the cash inflows are more than the cash outflows while at other times the cash outflows could be more. Hence, the cash is held by the firms to meet the certain as well as uncertain situations.

 

[Deleted member 27126]

When we are talking about cash that means money. Motives for holding cash ; the firm's need to hold cash may be attributed to the following three motives:

• The transactionary motivr
• The precautionary motive
• The speculative motive

TRANSACTIONARY MOTIVE: Cash is held yo meet anticipated payments in the ordinary course of business.
PRECAUTIONARY MOTIVE: Cash is held to meet unexpected cash obligations.The amount of cash held for this purpose would depend on the degree of accuracy if predicted cash flows and the organization's ability to borrow a short notice. Such cash should, preferably, be invested in highly liquid and low-risk marketable securities.
SPECULATIVE MOTIVE: cash is held for the purpose if investing in profitable investment opportunities as they arise.The test of liquidity is the availability of cash to meet the organisation's maturing obligations.
All these three motive are the reason for holding cash .And I need to here from you to.

All these are the three basic economics motives for holding money and the beauty of this is that they still valid up till today. But out of all the three, one should make sure he has much funds for speculative purpose especially in this time where cryptocurrency prices are low today and in the blinking of an eye, the prices become very high. Holding money to buy such coin and hold it can make a person to become rich over a short period of time.

 

[Georgeadawara]

There is no reason for your hold chase the only thing is that you can hold a small amount of money with you for in case of emergency it any thing else can occur you can be able to use the Cash with you but I not for that it will be better to use the cash to invest in other platforms that to keep them with you at home.

 

[Hena101]

There are many reasons people will tells you why they hold back cash but to me i think the only reason why they hold back cash is because no one want to go broke as they may say so that they can have enough of it not knowing that investing it more profitable than holding it back. Hold add no value to it while investing add value to it

 

[Chibson]

I like your post because it is well detailed. There are several reasons why people hold cash. I have someone for example he does not do internet banking or online banking because he is still old school and does not like the new trend. People also had cash to buy immediate stuffs, and not waiting for network before they can access their money.

 

[Ekuvero]

Well everybody do have his or her own reasons of not holding cash due to the cashless policy people Hardly have cash in handy cause they can easily makes transaction directly from their bank app. It all depends on the persons motive of holding cashing at hand some might be due to inflow and outflow of cash in the country economy others might be due to not been broke with you having any cash in handy

 

[eojo2401]

Motives of holding money may be varies from one person to another. Mr A. May hold money for investment purpose while MR B. needs such fund for feeding or meeting the basic needs of his family. Life is not balance at all, As some are struggling to have this fund to make a living some have more than sufficient, they don't even know what to do with the money in there custody.

 

[Briangsam]

I like this post. Many people hold money for different reasons. One major reason is the transactional reason. People have to pay for anything they buy or pay for any service rendered to them. They also hold money as a contingency plan. For unforeseen circumstances. They won't want to get stranded.

 

[Kingsley]

There are various motives for holding cash or money, the velocity of at which money changes hands rest non this motives. The first include the transactionary purpose, we money to transact business, we also hold money for precautionary purposes just in case we run into some sought of expenditures and last for speculative purposes.

 

[TOZZIBLINKZ]

Majority of people today prefer to hold money in cash rather than saving it in high security based financial institutions . it is understandable that we cannot always save all our money but rather have a little or medium amount of money which we can use to sort out daily activities . Like you have already mentioned there are actually three reasons why people prefer to hold money in cash which include the speculative motive , precautionary motive , and transactional motives . The reason to hold money just to be able to fend for our daily needs like buying what we eat for the day , paying our transport fare , and also funding our phone with airtime to call and data to browse or to go online , all falls under the motives of transactionary porpoises .

Secondly , the reason to hold money in cash for the purpose of sorting out unforeseen and uncalled circumstances like being able to buy drugs when we in particular or any member of our family for sick or ill , and being able to pay unexpected bills like house rent and electricity bills when the need arise , all falls under precautionary motives or reasons and purposes to hold money in cash . Finally to be able to invest in any risk-free or risk-less investments possibly when they show up , falls under the ability to hold money for speculative motives or purposes .

 

[Yusra3]

Holding cash provides liquidity and flexibility to cover short-term expenses, handle emergencies, take advantage of opportunities, and maintain financial stability during uncertainties. It serves as a buffer against cash flow disruptions, income volatility, and unforeseen costs. Cash reserves can fund investments when asset prices are attractive or facilitate major purchases without relying on credit. Keeping some assets liquid in readily accessible cash form helps individuals and businesses navigate economic cycles and unexpected events while avoiding costlydebt accumulation.