Commentary

Holding cash may mean risky business

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

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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. Subscribe