When markets get volatile, many investors move to cash for safety.
But can you really be staying "safe" in cash at .01% interest?
Sure! Sometimes you do have to keep cash on the sidelines. There could be several reasons:
- Balancing Risk: Perhaps your cash balance is just a part of balancing your overall portfolio, along with other positions you hold in stocks, bonds, funds, metals, etc. Cash may be kept in the portfolio to reduce risk, or to buy into greater asset positions when markets take a dip.
- Liquidity: Maybe you’re just trying to stay agile while you wait for the opportunity to buy.
- Confusion: No particular strategy here. You just don’t know where you’re going right now. You’d be surprised how many people I speak to that can not really tell me why they hold their cash positions! Below, I’ll tell you why, as much as you may think your reasons are the first two, it’s probably the third. But here’s the bigger point:
But you’re LOSING money because you’re not even keeping up with inflation! That’s Silly!
You can still be liquid and make substantially better interest rates!
EDUCATION CORNER: What actually drives interest rates?
Low Interest Rates Are Killing Seniors!
What should interest rates be? Who determines that?
Watch this compelling video from Dr. Antony Davies of Duquesne University to learn the answer!
There is a way to beat the trap of low interest rates on your cash accounts!