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Where To Store Your Business Reserves?

Ben Verschuere

A treasurer has many important duties; all of which lead to aiding a company in running their finances smoothly. As many Fortune 500s can attest, a well run treasury department shouldn’t be seen as a cost center but as a profit generator.

One aspect of treasury management is to look after a company’s reserves and how those reserves are held until they are deployed by the business. In doing so, the company treasurer must ask themself a critical question...

What is a good store of value?

There are three main attributes of  a good store of value. First, it should have a stable price and experience low volatility. Why bother holding hard earned cash in an asset that has wild and sharp price movement?

A second attribute of a good store of value is the asset’s ability to maintain its purchasing power over time. Why put money aside if value is set to shrink?

The last attribute is the ability for that store of value to become liquid. Without incurring transaction costs or delays, the store of value should house the flexibility to be efficiently turned into cash. Why save money if it takes extended  time and effort to liquidate that capital when it is needed most?

The three characteristics of a good store of value

Some potential candidates

Now that we have a better understanding of what constitutes a good store of value we can look at several candidates and assess their suitability.

The obvious first choice is cash. It has the benefit of being completely liquid (by definition). The main issue with cash is that its principal purpose (besides paying taxes) is to act as a means of payment.  Every year, inflation erodes its value and shrinks its purchasing power, thus, cash isn’t a great store of value.

Gold is another candidate. It has been tested by the times and is liquid. One disadvantage of gold is that it can be volatile: Some days gold can move by more than a percent! Another issue with gold is its “negative carry” which is the financial term to say that gold has some storage costs which need to be paid by the holder.

A newer form of gold are crypto assets. These are relatively liquid but also highly volatile. While they might be considered great for speculation, they (so far) wouldn’t qualify per our definition as a good store of value due to their high day-to-day price movement.

Compared to the assets above, corporate bonds, especially shorter dated ones, could be considered as a better candidate for a store of value. The benefit of a well-diversified portfolio of corporate bonds is the fact that it possesses good liquidity (especially if one uses mutual funds), doesn’t move too much on a daily basis and  generates income by paying interest.


While there are many financial assets, very few possess the attributes of liquidity, stability and the ability to maintain  purchase power over time.

As we reviewed above, a portfolio of relatively short dated corporate bonds could be considered a good candidate as a store of value, and this is why Treasure uses this asset class when assisting businesses with managing their reserves.

Ben Verschuere

Chief Investment Officer

Treasure Investment Management, LLC

Disclaimer: The views and opinions in this piece are just the author's own, offered to the public at large and not to any one particular investor.

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