For every investor, once you have savings you need to put it somewhere – it could be under the mattress if you thought the banks would fail, but since the banks have insurance, you are protected. You could leave it in a savings account, but the rates are very low. An alternative is money market funds which invest in Treasury bills back by the government. The fund will not be lose you money but it does not make a lot of money, however it is safe and secure.

In an article by James McGeever of Reuters, there is a record high $7 trillion of cash in money market funds.

Many strategists assume this massive pile of cash will start to shrink now the US Federal Reserve is cutting interest rates and investors seek alternatives. Will it move?

The road is lined with people trying to call the impact and timing of cash moving off the sidelines, says Adam Farstrup, head of multiasset, Americas at Schroders.

Money market balances have increased by nearly $40 billion since the Fed starting cutting rates in September, according to the Investment Company Institute, a global funds body.

Given the high levels of uncertainty surrounding the year ahead the environment is likely to be remain cash friendly.

James Camp, managing director of fixed income and strategic income at Eagle Asset Management suggests much of the money is not dry powder by rather as a permanent capital stock used for liquidity management.

In other words, the cash is likely to remain in money market funds.

Linking to dividend paying stocks, in every portfolio it is good to have liquidity if you think you will need to the money, however as trading settlements have changed to one day settlement, much of the stock market is liquid. It then becomes a choice. when you consider legendary investor Warren Buffett has billions in Treasuries (he owns 3% of the outstanding) what you choose will not be wrong. If you examine long term charts of owning Treasury bills and profitable dividend stocks, you will see dividend stocks outperformed. The reason for the outperformance is the dividends are paid, plus over the long term profitable companies tend to raise their dividends and including stock buybacks the share prices tend to increase as well.

There are more questions than answers, till the next time – to raising questions.