- It seems that holding plain cash (say after selling stocks and waiting for other opportunities to come up) in a brokerage or bank account is a bad idea (due to counterparty risk) (Clenow, 2015).
- Investing that extra cash in short-term government bonds (say 1 or 3 month) seems to secure the monetary value in case the brokerage / bank goes bust.
- Question: does the same counterparty risk protection apply to money kept in savings accounts (similar to bonds, but do not seem to be a financial instrument)?
Side Note: Would you consider Fixed-Income ETFs to serve this purpose as well? Having had a quick look at some ETFs it seems that their price can fluctuate (i.e. is not always on a slow upward trend; see iShares 1-3 Year International Treasury Bond ETF), which seems to disqualify using them as a temporary hedge against counterparty risk with some small positive interest.