Why ‘Cash is King’ in a Bear Market & What You Can Do to Still Grow Your Money

cash is king - cash management fund

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The economy isn’t exactly booming right now. The Russo-Ukraine conflict is still raging, China is still in the throes of Covid-19 lockdowns and protests, and we are now in a bear market, leaving investors biting their nails and wondering when the market is going to rebound.

It’s uncertain how long this downward trend will continue. But the prognosis doesn’t look good.

Goldman Sachs strategists see the bear market continuing in 2023, although their prediction for Asian stocks is a little more optimistic than other markets. Singapore’s economic growth forecast has been pegged at just 0.5% to 2.5% amid the global slowdown.

In other words, if you’ve been hoping for the market to bounce back, you might be in for quite a wait.

 

 

Why ‘Cash is King’ in a bear market

In a bear market, many investors are hesitant to jump into the market for fear that the downturn will continue. And who can blame them? In such uncertain times, there is no telling when investments will see gains. Instead, holding onto cash as you wait for the market to rebound can be wise.

But there’s another reason for the saying “in a recession, cash is king”. Cash aka liquid assets offers some security for emergency expenses in tough times, such as in the face of the runaway inflation that Singapore has been experiencing.

Having cash on hand is also necessary to swiftly seize investment opportunities. For investors who are looking to buy stocks at a bargain in anticipation of a market reversal, having ready liquidity on hand is key. You want to be able to jump into the market when a good opportunity arises, or react swiftly when the market rebounds.

Apart from having cash ready for your spending needs or to grab investing opportunities, you should also keep a separate emergency fund on hand. During this time of high inflation, you want to be sure you have a buffer in case of unexpected expenses.

 

 

A smarter way to park your cash

Cash might be king, but it may not be ideal to literally park your cash in a savings account or store it in a piggy bank, especially during this period of high inflation. Putting your cash into stocks may not be the ideal solution either, as you might get stuck holding onto them for a long time, trying to ride out volatility and waiting for market recovery.

But fear not, there is a smarter way to park your cash while retaining the liquidity you need in a bear market for emergencies and future investment opportunities.

Consider parking your cash in a cash management fund. Returns are typically lower than what you can get from stocks, but higher than the current tranche of Singapore Savings Bonds. But more importantly, cash management funds may give you relatively stable returns and potentially grow your money consistently over time.

One such cash management fund is moomoo Cash Plus Upsized. It’s a cash management fund that you can access through the moomoo brokerage app by clicking on the “Me” tab and selecting the promotion. Through moomoo Cash Plus Upsized, you can invest your money through Cash Plus’s funds, while retaining a high degree of liquidity and flexibility.

In these turbulent economic times, you can deposit your cash in your moomoo Cash Plus Upsized account while waiting for a market reversal, enjoying returns rewards of 5%* p.a. thanks to a current promotion (more on that later!).

Other than the attractive returns, another big advantage of moomoo Cash Plus Upsized is the flexibility and liquidity it offers.

There is no lock-in period, which leaves you free to use your cash to trade stocks whenever you need. Although you cannot withdraw cash from your universal account immediately, you can immediately reinvest the funds into stocks on the moomoo platform whenever you want, so you won’t have to worry about missing out on investment opportunities.

moomoo Cash Plus Upsized also charges absolutely ZERO subscription and redemption fees, so you can allocate your funds however you want without worrying about incurring penalties.

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Grow your idle cash with moomoo Cash Plus Upsized! With no lock-in and ZERO subscription and redemption fees, you’ll retain the liquidity and flexibility to invest your cash in something else whenever the opportunity should arise.

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*All views expressed in the article are the independent opinions of MoneySmart. Neither moomoo Singapore or its affiliates shall be liable for the content of the information provided. This advertisement has not been reviewed by the Monetary Authority of Singapore. T&Cs apply.