There is an old saying that "Cash is King

There is an old saying that "Cash is King." However, taking into consideration of inflation, which is defined as the rise in price of goods and services, cash can be view as a depreciating asset. Would you agree? No?

Let us take an example. A loaf of bread in Malaysia (today Jan 2012) would cost about $2.40. However, would the same $2.40 purchase the same loaf of bread 2 years from now? How about 5 year from now? The answer is a likely no. It does not take a rocket scientist to figure this out. So what has happened? Inflation! The rise in price for goods and services has depleted the buying power of cash. In other words, cash has depreciated. Now, would you agree?

In many of my investment workshops that I have conducted, most participants think that cash is a financial asset. Put things into