Cash is King?

You may have heard “cash is king”, an expression that refers to the fact that you’ll never lose money by holding cash.

But with deposit rates still low, you’re hardly getting good returns for sitting on cash. In fact, after taking account of inflation, returns are probably negative.

At the same time, market uncertainty has meant that so-called risky assets such as corporate bonds and equities offer attractive yields – much more attractive than the yield on cash deposits.

True, the price of risky assets can fall in the short term, and if companies cut their dividends the yield on their shares will not be as high as expected. But over the longer term holding such risky assets may be more rewarding than cash in the bank.