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Cash management funds could be good as an inflation hedge. But why so? First of all, inflation is something we complain about every year, but this year it has really gone through the roof. Everything is more expensive, from utilities and petrol, to food and groceries.
In order to survive, it’s time to pull out all the stops and try all means to counter inflation, and one of the ways is to consider Cash Plus, a cash management fund by moomoo.
This can be helpful, in addition to the other things you can do to reduce your spending, such as cooking at home more instead of eating out, being more careful about electricity and water use at home, using public transport more instead of relying on Grab all the time, looking for deals before buying anything and using a good cashback credit card.
Bearing this in mind, let’s take a closer look at why cash management funds could be an inflation hedge.
Cash management funds could help bridge the gap
A cash management fund is a mutual fund that you can invest in. Like other mutual funds, you pool your money together with that of other investors to invest in a portfolio. Cash management funds usually focus on short-term fixed income instruments like government bonds and fixed deposits.
Not sure how you can invest in cash management funds? moomoo Cash Plus is a cash management solution that gives you one way to do so.
To use moomoo Cash Plus, you can deposit money into your account. The potential return is estimated at about 2.5% p.a.^. That can help to bridge the gap between the money you are trying to save and the current inflation rate of over 5%.
The advantages of using Cash Plus extend beyond just the interest rate. For starters, there is no lock-in period, so you can pay in and withdraw cash whenever you want.
New feature that helps you automatically re-invest
moomoo Cash Plus now has a new function called Smartsave which allows users to automatically re-invest uninvested brokerage cash in the cash management fund. This type of mechanism is known as a cash sweep programme.
So, when you have any cash lying around in your universal account, you can conveniently earn the moomoo Cash Plus potential return on them while waiting for a better investment opportunity.
This is a great way to make your idle cash work harder for you. For instance, moomoo Cash Plus can be very useful for cash that you’re planning to invest or re-invest when the time is right.
This could happen if you just sold your shares and are waiting to re-invest your money. In the meantime, instead of letting it rot away in your universal account, you may as well earn the estimated interest rate of up to 2.5% p.a.^ by stashing it in moomoo Cash Plus. When the market moves in your favour again, you can withdraw and re-invest it using your moomoo universal account straight away.
Another example could be if you are saving up money to buy a house. Obviously, you would not want to invest your cash in anything risky. moomoo Cash Plus would thus give you a lower risk way to earn some interest on that cash in the interim.
Why a cash sweep function makes sense
moomoo Cash Plus’s Smartsave cash sweep function lets you automatically transfer the cash in your universal account to moomoo Cash Plus. This transfer can be done at the end of each day, letting you start earning potential returns on your cash right away.
Whenever you need to invest your money, you can transfer it instantly from moomoo Cash Plus to your universal account.
This makes a lot of sense, as cash lying dormant in your universal account does not earn interest. With moomoo’s cash sweep function, you’ll automatically begin earning the Cash Plus interest rate of about 2.5% p.a.^ on it.
They also offer the flexibility to withdraw and re-invest your money whenever you want without having to worry about lock-in periods or affecting your interest rate.
Moomoo Financial Singapore Pte. Ltd. is licensed by the Monetary Authority of Singapore (MAS), so you can rest assured it’s a legit way to grow your money.
How to activate the Smartsave function with moomoo?
You can activate the Smartsave function in just a few easy steps!
moomoo Cash Plus offers a great way to fight against inflation by earning an attractive interest rate on your spare cash. Thanks to the new Smartsave function, you can even earn Cash Plus potential returns on the idle cash in your moomoo SG universal account.
^The indicative 7-day annualised yield is derived from the past performance of money market funds on moomoo cash plus and should not be viewed as an indicator of future results.
All views expressed in the article are the independent opinions of MoneySmart Singapore. 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.
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