Jim Cramer mentioned something recently on his CNBC show, Mad Money, that should have resonated with investors. “Cash is no longer king.”

What Does He Mean?

Let’s clarify that Cramer is not referring to the cash in your pocket. Cash for some time has been king because fixed-income, cash investments have offered great returns. These investments have offered investors solid returns and a safe place to store money. For the conservative investor, money market savings accounts, CDs, and municipal bonds have been a low-risk way to beat inflation.

So Why is Cash No Longer King?

Wall Street is pretty confident that the Federal Reserve will continue to cut rates. Federal Reserve Chairman, Ben Bernanke, stated on Nov. 29^th that the Fed is “alert and flexible” as the weakening condition in the financial markets may have a broader affect on the economy. This is coming off the heels of No. 2 official, Donald Kohn, who stated the day before that the central bank must remain “nimble.”

Is Cramer right? Is cash no longer king? Well, we already know that the federal rate cut is bad news for savers and as things can potentially worsen, the Fed will likely continue to cut short-term interest rates. This will make cash investments less valuable. Cramer speculates that over the next year, short-term rates will continue to come down, and the yield you have been used to receiving from your CD will also come down. As the rates come down, your cash investment will no longer be able to keep up with the rate of inflation.

Now What Do We Do?

If Cramer is right, you should get out of your cash investments. If you have a CD, do not to renew your CD when your investment matures. Many times this will happen automatically unless you request to cancel the investment. But be sure not to withdraw early and incur early withdraw penalties.

Now Where Do We Go?

With the recent decline in the stock market, there are some great buying opportunities in equities. Cramer suggests the financial sectors, which have experienced huge declines, may be oversold, and offer great dividends. Take a close look at Bank of America, Citigroup, and Freddie Mac for example, but there are opportunities throughout the market in all sectors and industries.

Considering we are entering a pre-election year, which makes it historically the best time ever to be in the stock market, Cramer may be on to something. Secondly, with the recent panic there is a lot of cash on the sidelines that investors will need to put somewhere. With fixed-income investments being unattractive and stocks looking cheap, the money should return to the market and drive prices back up.

Millionaire Money Habit: As a long-term accumulator of wealth, your main goal should be to not lose money with your investments. If interest rates continue to come down, your cash investments will not be able to keep up with the rate of inflation. Consider putting your cash investments in another investment vehicle that can offer a greater return.

Before dumping all of your money in financials, realize we are talking about your investment funds, not your savings and emergency funds. Do not stray from your investment strategy, continue to diversify, always keep some cash on the sidelines and always do your due diligence before jumping head first into an investment.