Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Idle Funds

What it is:

Idle funds are monies that are not invested.

How it works (Example):

Money, like people, must work in order to earn money. And just as when people do not work, when money is not invested, it is not earning money. It is idle.

Why it Matters:

From a strictly financial perspective, idle funds are wasted money. When inflation is increasing, idle funds are even dangerous because the longer they are idle, the less they are worth.

From a consumer perspective, it is often necessary to keep some funds "uninvested" in a checking account or similar in order to pay bills and whatnot (companies face this same issue). The idea is to use forecasting and budgeting to keep these idle funds to a minimum, however.