Cash & Short-Term Treasuries

A Provident Investor Guide

Cash is the simplest and most overlooked asset class. It does not earn much in normal times, yet it becomes incredibly powerful at certain points in economic cycles. This page explains what cash and short term Treasuries are, how to use them wisely, and how the Unified Compass tells us when this quiet asset becomes a strategic advantage.

1. What Cash and Short Term Treasuries Are

Cash refers to money sitting in checking accounts, savings accounts, and on hand. It offers safety, liquidity, and flexibility.

Short term Treasuries are government bonds that mature in one year or less. They are backed by the United States government and are considered among the safest income producing assets available.

People use cash and short term Treasuries because:

  • They preserve value during market downturns
  • They are immediately available when opportunities arise
  • They help families avoid forced selling
  • They earn modest income when interest rates are elevated

Cash is not exciting, but it is essential for stability.

2. How to Buy Short Term Treasuries

Treasuries can be purchased in two ways:

Through a Brokerage

  1. Open an account at Fidelity, Schwab, Vanguard, or similar
  2. Search for Treasury bills with maturities of 1 to 12 months
  3. Choose the maturity you prefer
  4. Place a buy order

Through TreasuryDirect.gov

  1. Create an account
  2. Link your bank account
  3. Buy Treasury bills directly at auction

Brokerage purchases are usually easier to manage, especially when building a ladder.

3. How to Sell Cash and Treasuries

Cash requires no selling. It is ready whenever you need it.

Short term Treasuries can be:

  • Sold inside your brokerage account
  • Or simply allowed to mature and return the full amount to your cash balance

Because they are short term, they do not lock you into long commitments.

4. How the Unified Compass Uses Cash

The Unified Compass treats cash as the stabilizer of the family financial system.

The Compass increases the role of cash when:

  • Stocks are expensive
  • Precious metals are overheated
  • Volatility is low
  • Economic risks are rising
  • Many assets offer poor reward relative to risk

The Compass reduces the role of cash when:

  • Assets enter Buy Zones
  • Valuations become attractive
  • High conviction opportunities appear

Cash is not meant to be a permanent holding. It is a tool for timing when the odds are in our favor.

5. Risks and Things to Be Careful About

Cash carries very little risk, but there are still cautions:

  • Inflation reduces its purchasing power
  • Sitting on too much cash for too long can limit long term growth
  • Extremely high cash levels can lead to missed opportunities

To avoid these problems, the Unified Compass adjusts cash positions based on data rather than emotion.

6. Where Cash Fits in a Family Portfolio

Cash provides:

  • Emergency reserves
  • Stability
  • Flexibility
  • Opportunity funding
  • Psychological comfort

Treasure bills add:

  • Safety
  • Modest income
  • Reduced volatility

Together, they help families remain financially stable during uncertain times.

7. Historical Behavior and Lessons

History shows that families who keep an appropriate cash reserve tend to:

  • Avoid selling assets at the worst times
  • Make better decisions during recessions
  • Buy high quality assets when they are discounted
  • Handle emergencies without debt
  • Maintain emotional clarity

In most financial crises, the families with cash ready tend to advance, while those without cash tend to fall back.

8. Questions People Often Ask

How much cash should I keep
Many families keep three to six months of expenses in cash. The Unified Compass then adjusts additional cash levels based on current conditions.

Do I lose money by holding cash
Inflation can reduce its value, but the safety and opportunity benefits often outweigh that during certain market phases.

What about long term bonds
They carry added risk when interest rates rise, so this guide focuses on short term Treasuries.

9. Glossary for Beginners

Treasury bill (T bill)
A short term loan to the United States government.

Liquidity
How quickly an asset can be turned into spendable cash.

Maturity
The date when a Treasury pays back the full amount.

10. Simple Example Scenario

David wants to prepare for possible buying opportunities in the next year. He moves a portion of his savings into three month and six month Treasury bills. As they mature, he rolls them into new bills unless the Unified Compass signals a Buy Zone in another asset class. This gives him income, safety, and flexibility.

11. Getting Started Checklist

  • Do I have a comfortable cash reserve
  • Do I know how to buy Treasury bills
  • Do I understand why the Compass sometimes raises cash levels
  • Am I avoiding emotional reactions
  • Am I building a patient, stable financial foundation
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