Veteran Stock Invester Warren Buffet told about the value of cash in a letter to his shareholders in 2014. He wrote that his group i.e. Berkshire Hathway always keeps at least 20 billion dollars in cash. Its purpose was to ensure the economic security of the group. His advice not only matters to a company or business group, but it is equally important for a common person today.
Many dangers of loan facility within a few minutes
There has been a big change in the credit market in the last few years. Fintech companies transfer loan money to account within a few minutes. This means that it has become very easy to take a loan loan. It takes the amount of time it takes to buy vegetables, milk in the market or to fill petrol in the car. Due to this, people are taking a lot of loans, especially youth. The question is, is it right to take more loans?
Take a loan only when there is a backup security
Financial experts say that no one is cares about the basic principles of finance today. If you are going to take a loan, then you must have a reserve asset to repay it. Companies have cash and individuals for this reason. This emergency fund helps you in case of sudden trouble. Especially if you do a private job or are in such a profession then it becomes even more important.
Cash reserve helpful in erect property
The other advantage of keeping cash with you is that you can take advantage of the opportunities of investment. Buffet always used investment opportunities. He took advantage of Value Investing. This gave him a chance to earn a lot of returns. Buffet rely in the principle of buying at a low price and selling at high prices. Using this theory, he has created immense assets.
Cash reserve is also necessary for individuals
It is not that Buffet told Shayolders about the value of cash only for the first time in 2014. He also tried to explain the importance of cash in his 2008 letter. He wrote, “… The way it is like oxygen for cash business, it is also very important for the individual.
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Cash can save you from trouble
This advice of Buffet is equally important today. If you have cash, then you can pay your home fare even in the event of going to the job. You can continue SIP payment. You can pay EMI of home or car. Overall, it saves you from getting into big trouble. So if you have not kept some money separate for trouble, then do not delay it. Financial experts call it Emergency Fund. This fund should be sufficient for your spending of at least six months.