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| Economy |
| Cash can beat stocks in returns and happiness |
| 2019-01-10 |
| CHICAGO (Reuters) - How bad was 2018 for investors? They pulled a record amount of money from stock and bond funds late in 2018 and tucked it into safe havens such as CDs, money market funds or U.S. Treasuries that mature in a year or less. In better times, investors usually use bonds as a buffer when stocks turn nasty, but last year stock and bond funds alike were losers. The Standard & Poor’s 500 fell 4 percent for the year and the bond funds tracked by Lipper, on average, dropped 1.7 percent. Meanwhile, the top money market funds provided returns of more than 2.4 percent. "The flight to safety was perplexing because this was not a 2008 market meltdown, but I don’t think people are willing to wait anymore to see," said Tom Roseen, Lipper Head of Research. Among the concerns gnawing at investors: uncertainty about interest rate increases, the U.S. trade dispute with China and slowing global growth. "This is the first time in years, that I have been looking at cash as a viable asset class," said Linda Erickson, a Greensboro, North Carolina certified financial planner. Every quarter last year she advised clients to sell 2 percent of their stock portfolio and add the money to a money market fund. The goal was to create a safe stash that would not suffer losses in bonds if interest rates continued to rise. With some money market funds and savings accounts yielding more than 2 percent, parking cash was far more acceptable in 2018 over previous years where interest rates were closer to zero for the same accounts. |
| Posted by:Besoeker |
| #8 over the past 10 years, the S&P (based on various exchange traded funds) has, on average, risen by about 10% a year (compounded and assuming dividends were reinvested) this is true even though in 2018 the S&P lost about 5% |
| Posted by: lord garth 2019-01-10 21:30 |
| #7 I sold 100% of my stock portfolio. In 2007. |
| Posted by: Anguper Hupomosing9418 2019-01-10 15:13 |
| #6 The federal reserve is also a threat |
| Posted by: warthogswife 2019-01-10 13:26 |
| #5 That's good inflation whereby the taxpayers fund an asset class that does nothing for the productivity of the economy, the establishment protection agency AKA the fed will worry about all those workers not being fined so much and getting pay rises. |
| Posted by: Bright Pebbles 2019-01-10 12:44 |
| #4 ..what do you mean 'unless', that's what the Fed did for 8 years under Obean. Those half million dollar homes and their paper that went to quarter million dollar homes and paper in 2009 are now back to half a million. Meanwhile the peasants are paying double for gas, bread, milk, etc. |
| Posted by: Procopius2k 2019-01-10 11:37 |
| #3 Cash on hand is good unless the goverment cranks up the printing presses and there is hyperinfation as in the Weimar Republic. |
| Posted by: JohnQC 2019-01-10 11:04 |
| #2 ...or two years calculating, that while there will be significant regional spikes (particularly in NIMBY locations), inflation on certain commodities. |
| Posted by: Procopius2k 2019-01-10 09:09 |
| #1 I have always been an advocate of having a min 6 months operating cash in case of emergencies like a layoff. A year is better... |
| Posted by: BrerRabbit 2019-01-10 07:00 |