With expensive markets and a falling cash rate, you need to become more strategic about cash – both for buying opportunities in a fall and to maximise returns.
Selling shares and adding cash to portfolios has low appeal with the sharemarket rallying and the Reserve Bank of Australia poised to cut interest rates next week and again later this year.
But a 2 per cent return from cash will feel like a windfall if global equities tank and the longest bull market in history ends. If the bears are right, 2019-20 could be the year of cash as savvy investors focus on capital preservation and having funds to buy shares at lower prices.
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Tony Featherstone writes on Personal Finance specialising in Superannuation & SMSFs, Specialist Investments.
