Cash went from worst to best performing asset this year. Has never been best in 19 years.

by gorillaz0e

Graph of this issue:

This year’s top-performing asset class isn’t stocks, bonds, commodities, or real estate.

And no, it’s not crypto-currency either.

It is cash.

That’s right. Cash is the top performing asset class year-to-date. Beating out U.S. stocks, global stocks, investment grade bonds, junk bonds, commodities, real estate, you name it…

Cash is king.

Cash is underrated by most investors. Yet it’s the easiest way to reduce risk in your portfolio. It can cushion your portfolio during a market crash, as well as deliver unlimited upside in the form of opportunities that have yet to come.

But I’ve noticed a common problem when investors are holding cash… they don’t know what to do with it.

And to be honest, there are so many options out there between savings accounts, money market accounts, certificates of deposit (CD), mutual funds and ETFs that it can be confusing. It’s easy to see why investors leave their money parked in their brokerage sweep accounts or a savings account at their local bank.

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When I first got into investing and folks would talk about cash and the “risk-free rate” of Treasury Bills (T-Bills), I thought the only way to access those T-Bills was through a bank or mutual fund or some other financial institution. But that’s not the case… I’ll tell you exactly where I invest my cash that cuts out the middle-man, like banks, and their fees.

But first, let’s look at the national average of interest earned in savings accounts, money market accounts and 1-year CDs. After all, with the Fed having increased interest rates, you should be getting a better return on that cash parked in your savings account, right?

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That doesn’t seem to be the case…

According to the Federal Deposit Insurance Corporation (or FDIC — the entity that insures the money in your bank accounts), the national average interest rate paid on savings accounts is a meager 0.09%. Money markets pay 0.16% while locking up your money for one year in a CD will net you 0.60%.

Meanwhile, the current federal funds rate is 2.25%.

Which asset do you think will be the best performer in 2019?

Are you increasing your cash position in 2019?


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