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Capital IdeasTM

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Fixed Income
Is now a good time to move your cash into fixed income?
August 13, 2023

In this video, we discuss if now is a good time to move your cash into fixed income.


Video transcript


Is now a good time to move your cash into fixed income?


Current fixed income yields are looking attractive and may provide a compelling investment opportunity against cash.


Yields have gone up rapidly over 2022 and into 2023, even on cash. Investors could now enjoy a meaningful rate of return even on cash investments such as fixed deposits.


Now could be a good time to consider moving some of your cash into fixed income.


Here are two reasons why:


Reinvestment risk.


These higher yields may not last forever. With current US interest rates at a decade high, a fall in rates would result in cash returns declining in tandem.


Putting your cash into a portfolio of fixed income investments now can potentially capture these current yields and reduce reinvestment risk.


Potential for capital appreciation.


Yields are just half the picture. While both cash and fixed income offer yields that are currently in the same range, investing in fixed income now could allow you to participate in any potential price appreciation of the underlying securities, more so if recessionary fears result in interest rate cuts.


Now could be a good time to move your cash into fixed income.


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