Temporary Investments

Investment designed to be held for a short period of time, typically a year or less. Some examples of temporary investments are money market mutual funds, money market deposit accounts, NOW checking accounts, Treasury bills, and short-term CDs. Investors shifting money into such investments may have sold stocks, bonds, or mutual funds, and are keeping their assets liquid while they decide which investments to buy next. They also may be fearful that securities prices are about to fall, and they want to keep their assets in temporary investments to sidestep such a downdraft. While their money is in temporary investments, it continues to earn interest at prevailing market interest rates. See also Parking.

Strategy of using seasonal excess of cash to invest in marketable securities that the company intends to convert back into cash within one year. The investments produce dividend and/or interest income as well as possible capital appreciation for the company. Temporary investments are considered short-term investments and are classified as current assets under the Marketable Security heading on the balance sheet.