Hiding out from market volatility in 'near cash' can be rewarding - BNN Bloomberg

As central banks aggressively tighten monetary policy to tame inflation , these are uncertain times for those who count on the markets to grow their retirement savings.

“It’s not a market where there’s an obvious trade or there’s an obvious thing to do and sometimes that just happens, and it’s best to sit on the sidelines,” he said.There are several terms for cash-like instruments; near money, quasi-money, cash equivalents, arm’s length cash, or near cash. Near cash, along with other fixed-income investments, has an amazing way of stemming equity losses and preserving the worth of a broader portfolio.

The next nearest cash is probably a high-interest savings account. You’ll need to shop around but some financial institutions are posting three per cent annually — assuming certain conditions, such as minimum deposit amounts, are met. Past returns for money market funds have been dismal, but can be expected to rise with interest rates.Generally, yields gets higher as the term to maturity lengthens. If you have more time to spare, some one-year guaranteed investment certificates have reached 4.5 per cent.

In a high inflation environment, getting out of the market is the best way to ensure paper loses become real. As Warren Buffet always says, “Don’t be such a wimp.”

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