Greenbacks. Moola. Cold hard cash. Every portfolio should have some exposure to the asset, from the young to the old.
Right now, it’s easy to ignore the importance of cash in an investment portfolio, because cash isn’t exactly knocking it out of the park when it comes to returns. And in fact, it’s been losing money to inflation. But let’s not forget that most money market mutual funds would also have negative returns if it weren’t for expense ratio waivers.
However, holding some cash is beneficial and it’s downright crucial for older investors and retirees.
So what can investors do? Suffer from low and paltry yields and returns? Not if you’re willing to look slightly beyond the definition of what cash is. There are plenty of ways for investors to get their liquidity fix, even with the Fed starting to raise rates.
Rising interest rates are a major catalyst for the markets in the near future. Check out how Wall Street has historically reacted to interest rate hikes one day and one month post the hike here.