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Cash can beat stocks in returns and happiness
CHICAGO (Reuters) - How bad was 2018 for investors? They pulled a record amount of money from stock and bond funds late in 2018 and tucked it into safe havens such as CDs, money market funds or U.S. Treasuries that mature in a year or less.In better times, investors usually use bonds as a buffer when stocks turn nasty, but last year stock and bond funds alike were losers. The Standard & Poor’s 500 fell 4 percent for the year and the bond funds tracked by Lipper, on average, dropped 1.7 percent. Meanwhile, the top money market funds provided returns of more than 2.4 percent. "The flight to safety was perplexing because this was not a 2008 market meltdown, but I don’t think people are willing to wait anymore to see," said Tom Roseen, Lipper Head of Research. Among the concerns gnawing at investors: uncertainty about interest rate increases, the U.S. trade dispute with China and slowing global growth. "This is the first time in years, that I have been looking at cash as a viable asset class," said Linda Erickson, a Greensboro, North Carolina certified financial planner. Every quarter last year she advised clients to sell 2 percent of their stock portfolio and add the money to a money market fund. The goal was to create a safe stash that would not suffer losses in bonds if interest rates continued to rise. With some money market funds and savings accounts yielding more than 2 percent, parking cash was far more acceptable in 2018 over previous years where interest rates were closer to zero for the same accounts. Posted by: Besoeker 2019-01-10 |
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