Cash Reserves
Last reviewed: September 2, 2026
Cash reserves are funds kept readily available instead of being committed to long-term investments or spending. Individuals, businesses and investment portfolios may all hold cash reserves for different reasons.
Reviewed September 2026
What can count as cash reserves
Depending on the situation, reserves may include bank deposits and other highly liquid, short-term holdings. The key idea is access: the money should be available when it is needed without relying on the sale of a volatile long-term asset.
Personal cash reserves
For a household, cash reserves can provide a buffer for unexpected expenses, temporary loss of income or planned purchases. The appropriate amount depends on expenses, income stability, insurance and other personal circumstances.
Business cash reserves
A business may keep reserves for payroll, taxes, inventory, debt payments or unexpected operating costs. Too little cash can create liquidity problems even when the business is profitable on paper.
Cash reserves in a portfolio
Investors may hold cash for near-term spending, to reduce portfolio volatility or to have funds available for future purchases. The trade-off is that cash typically has lower long-term return potential than riskier assets.