Cash is King! Or is it..?



Is cash safe? Panic-selling is not the way forward.

When the markets crash, confusion and fear ensue and people panic-sell. However, selling up is not the best option.

People tend to think that commodities, equities and hedge funds are some of the riskier asset classes, however cash is most certainly not the safest option.

Here are a few reasons why:

  • Cash is the worst performing asset class – over long periods it has underperformed all other major asset classes.
  • You’re losing money when you leave cash sitting in a bank account. This is because you cannot keep up with inflation. If your investments are not keeping up with inflation, you are automatically losing purchasing power.
  • Interest rates are at an all-time low – 0.05% is not an uncommon interest rate for a current account these days – and some banks even have negative interest rates just to look after your money!
  • Timing the market does not work – you would need to know when to get out, when to go back in, pay all the relevant transaction charges each time (expensive), and will usually get it wrong. The Director of Research at Morningstar, a company that evaluates portfolio performance, stated that there is not a single example of a mutual fund beating the market over time by using the ‘market timing method’. Sitting it out and riding the wave is the way forward.
  • The rush to cash-in often starts near the stock market bottom; at precisely the worst time.

Cash appears to be comforting because it does not move around much. It is easy to understand, and it does not “go down.” But in fact, it does decrease in value by not keeping up with inflation and losing the purchasing power, and it would not have any value in the event of a true collapse of the economy. It is always a good idea to have reserves of cash for the short term (4-6 months) but hoarding it is not the way forward.

Forth Capital specialises in retirement planning, expat pensions and investments – to speak to one of our advisers click here or call +41 22 311 1441

Trudi Hayes

The Author

Trudi Hayes

Latest News



Switzerland Tops the...

The 2019 results of the HSBC Expat Explorer Survey are out, and Switzerland has knocked Si...

Read More



Passive Investments ...

Passive investing is an investment strategy that tracks an index and focuses on increasin...

Read More

Important Information


Access to this site is only granted to users who have read the following terms of use.

The content of this website has been written for EU (Not including UK) residents only.

The information contained on this website is for information purposes only and is not intended as financial advice, an offer or solicitation for the purchase or sale of any financial instrument.  This website is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law. The information on this website is subject to change without notice.

Not all products or services are available in all geographical areas. For further information visit out Compliance and Regulation page or contact your local Forth Capital office.

By pressing agree you are confirming that you are resident within the EU (not including UK)