Holding cash may mean risky business

Investors with too much cash could deplete their portfolios in times of negative real yields

The renewed decline in yields and cash rates across global markets in recent weeks leaves investors in a conundrum.

The safest assets, like cash and government bonds, now guarantee real (or inflation adjusted) wealth destruction if held to maturity. Non-dollar bonds in developed markets even have a negative nominal yield, on average.

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A version of this article appeared in the print edition of The Straits Times on October 21, 2019, with the headline 'Holding cash may mean risky business'. Print Edition | Subscribe