DEFINITION of 'Money On The Sidelines'

The cash that is held either in savings or in low-risk, low-yield investment vehicles, such as certificates of deposits (CDs), instead of being placed in investments that have the potential for greater rewards, such as the stock market. Money on the sidelines is kept away from risk, especially during periods of economic or market uncertainty.

BREAKING DOWN 'Money On The Sidelines'

Money on the sidelines describes the vast amount of cash that is held in low-risk investments while individuals and companies wait for economic conditions to improve. Legendary investor Warren Buffett is known to take advantage of times when most investors are on the sidelines, opening or adding to positions in undervalued companies at bargain prices. Buffet has said of his investing strategy, "Be fearful when others are greedy, and greedy when others are fearful".

RELATED TERMS
  1. Investment Vehicle

    A product used by investors with the intention of having positive ...
  2. Term Deposit

    A deposit held at a financial institution that has a fixed term, ...
  3. CD Ladder

    A strategy in which an investor divides the amount of money to ...
  4. Brokered Certificate Of Deposit

    A certificate of deposit (CD) that is purchased through a brokerage ...
  5. Underinvestment Problem

    An agency problem where a company refuses to invest in low-risk ...
  6. Bank Investment Contract - BIC

    A security or portfolio of securities that offers a guaranteed ...
Related Articles
  1. Personal Finance

    Warren Buffett: Be Fearful When Others are Greedy

    It is prudent for the investor to understand when the party has gone on long enough and the clock is about to strike midnight. Be fearful when others are greedy.
  2. Investing

    Money Market vs. CDs: Which Is the Better Investment?

    Find out which short-term savings vehicle, a money market account or a certificate of deposit, is a better investment for your needs.
  3. Investing

    Savings Bonds Vs. CDs: Which Is Better in 2016?

    Understand what a savings bond is, what a CD is and what sets them apart from each other. Learn why a savings bond is the right investment for 2016.
  4. Investing

    Alternatives for Low-Yielding Bonds

    Where can clients turn for an alternative option to low-yielding bonds?
  5. Investing

    Cash Vs. Bonds: What to Pick in Times of Uncertainty

    Learn about the benefits and drawbacks of holding cash versus investing in bonds to ensure you make the right decision about how to best safeguard your money.
RELATED FAQS
  1. How safe are money market accounts?

    Learn the difference between a money market account and a money market fund. Both savings vehicles are relatively safe, but ... Read Answer >>
  2. Are short-term investments a good strategy for cash-rich small businesses"?

    Learn more about investment choices available to small businesses and whether short-term investing is a smart choice for ... Read Answer >>
  3. How do I calculate a bond's modified duration using Excel?

    Understand the benefits of investing in a money market mutual fund, and learn why investors use this type of account in volatile ... Read Answer >>
  4. What determines the interest rate in my money market account?

    Placing funds in a money market account may provide a higher interest rate than a savings account due to the underlying securities ... Read Answer >>
  5. Are money market funds considered cash?

    Learn the difference between how analysts and auditors treat money market funds and why not knowing the difference can hurt ... Read Answer >>
Hot Definitions
  1. Trumpcare

    The American Health Care Act, also known as Trumpcare and Ryancare, is the Republican proposal to replace Obamacare.
  2. Free Carrier - FCA

    A trade term requiring the seller to deliver goods to a named airport, terminal, or other place where the carrier operates. ...
  3. Portable Alpha

    A strategy in which portfolio managers separate alpha from beta by investing in securities that differ from the market index ...
  4. Run Rate

    1. How the financial performance of a company would look if you were to extrapolate current results out over a certain period ...
  5. Hard Fork

    A hard fork (or sometimes hardfork) is a radical change to the protocol that makes previously invalid blocks/transactions ...
  6. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
Trading Center