How fintech’s are streamlining cash investing
Innovation in cash management platform technology provides a new way to research, manage, transact and switch investments for investors and advisers. It can create a new journey for investors and advisers. It also enables advisers to deliver core cash investing services that are more accurate and efficient, leading to positive impacts for their brand and clients alike.
Keeping risk in check
In a global financial marketplace where risks are rising and trade wars and slowing economies are becoming the norm, defensive assets such as corporate bonds may be overpriced and not be as safe as they once were.
With interest rates at an all-time low, investors could also be forgiven for questioning the value of cash investing, especially if they are transitioning to or are in retirement. However, for individuals considering retirement or in the post retirement phase two major benefits of cash is its liquidity availability. And because it’s already in the form of cash, there is little impact on its value when an investor moves in or out of the asset class. Investors can take advantage of other investment opportunities quickly because they’re not waiting for assets to be realised before they can invest. On a more practical level, having access to cash can also help investors deal with unexpected expenses.
For all investors cash remains a low-risk defensive asset offering downside protection, making it an important allocation in any portfolio.
Additionally, in a post-Financial Services Royal Commission world, and a world rapidly moving towards the introduction and embracing of Open Banking next year, there’s more emphasis than ever on ensuring investment products support investors’ best interests. The need exists to detail how advisers are helping ensure investors are able to help look after their own interests, typically by making available an easy to review range of investment options within an asset class.
With the Reserve Bank of Australia dropping the cash rate to an unprecedented level, there certainly remains the opportunity rates may decline further. This poses challenges for fixed interest investments such as term deposits that traditionally comprise the defensive component of an investor’s portfolio.
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