Hk wm article passive income balanced en

Cash is no longer king?

7 Oct 2024

This article is for informational purposes only.

It’s time to rethink cash as the Fed cuts rates

💸 Cash yields are likely to move significantly lower
Yields on cash over the past two years have been among the highest in over two decades. However, this period is now coming to an end. Money markets and the Fed’s own projections argue cash yields are likely to move significantly lower over the coming 6-12 months. Many have experienced the impact of falling rates on returns.

📉 Policy rates may decline to below 3% by end-2025
In September, the Fed cut rates for the first time in over four years, ending the post-COVID hiking cycle. This shift bears important implications for cash. Cash yields, like those on US 1–3-month Treasury bills, tend to follow Fed rates closely, and as markets expect policy rates to decline to below 3% by end-2025, cash yields will likely follow.

⚠️ Reinvestment risk
For short-term securities such as cash, this means the same level of yield will no longer be available once the securities mature and the reinvestment of matured assets will likely return less than before. This is known as reinvestment risk. It is thus imperative to address this risk before yields fall, not after when it is too late.

Time to explore ways to enhance yields and boost passive income!

Passive income ideas for you:

💡 Check out our list of Signature CIO Funds available on Fund Library:

Fund Name
Signature CIO Income Funds

• Aims to generate regular income by investing in a diversified portfolio of income generating securities globally

• Aims to generate capital appreciation over a mid to long-term investment horizon by accessing opportunities across multiple asset classes
Signature CIO Conservative Funds

• The fund seeks to generate income over a mid to long-term investment horizon.

• The fund invests substantially into fixed income securities and money market funds which offers smoother returns with potential downside-risk protection
Signature CIO Balanced Funds

• The fund seeks to achieve moderate growth through capital appreciation and income accumulation over a mid to long-term investment horizon

• The fund invests a similar amount into equities and fixed income, with a slight tilt to equities. It also invests in commodities and alternatives

• Balanced allocation between equities and fixed income aims to provide upside returns while mitigating drawdowns
Signature CIO Growth Funds

• The fund seeks to achieve moderate growth through capital appreciation and income accumulation over a mid to long-term investment horizon

• The fund invests a similar amount into equities and fixed income, with a slight tilt to equities. It also invests in commodities and alternatives

• Balanced allocation between equities and fixed income aims to provide upside returns while mitigating drawdowns

Take 2 minutes and get to know what Signature CIO Funds are

💡 Explore life insurance plans to protect your love ones and plan for your future

There are life insurance plans offering both regular income and life protection with features such as the following:

• With 3 or 5 years of annual premium, receiving non-guaranteed monthly income up to 4% p.a. of total premiums paid until first life assured reaches 150
• Apart from monthly income stream, total cash value of the insurance plan grows through the policy years for wealth accumulation and family protection

Get in touch for a comprehensive financial planning

Want to chat with our specialists directly?

Hk myrm

Alternatively, you can speak to your RM via myRM* on SC Mobile App to learn more

*Exclusive for Priority Private or Priority Banking clients

If you do not currently have an Investment Fund Account, follow the 4 easy steps to start investing now:

Edm warren buffettjapanese stocks desktop en

< Return to Wealth Guru for more articles

Disclaimers

Important Note of Investment Products

Premium deposit, Equity Linked Investments and structured notes are structured products involving derivatives. Investment Fund is an investment product and some Investment Funds would involve derivatives. The investment decision is yours but you should not invest in that investment product unless the intermediary who sells it to you has explained to you that the product is suitable for you having regard to your financial situation, investment experience and investment objectives.

Risk Disclosure Statement

  • Investment involves risks. The prices of investment products fluctuate, sometimes dramatically and the worst case may result in loss of your entire investment amount. Past performance is no guide to its future performance.
  • Investors should read the terms and conditions contained in the relevant offering documents and in particular the investment policies and the risk factors and latest financial results information carefully and are advised to seek independent professional advice before making any investment decision.
  • Investors should consider their own investment objectives, investment experience, financial situation and risk tolerance level.

Foreign Exchange:

  • Foreign exchange involves risks. Fluctuation in the exchange rate of a foreign currency may result in gains or significant losses in the event that the customer converts deposit from the foreign currency to another currency (including Hong Kong Dollar).

RMB Deposit Service:

  • Renminbi (“”RMB””) exchange rate, like any other currency, is affected by a wide range of factors and is subject to fluctuations. Such fluctuations may result in gains and losses in the event that the customer subsequently converts RMB to another currency (including Hong Kong dollars); and
  • RMB is currently not freely convertible and conversion of RMB through banks in Hong Kong is subject to restrictions specified by the Bank and regulatory requirements applicable from time to time. The actual conversion arrangement will depend on the restrictions prevailing at the relevant time.

Disclaimer and Important Notes of Insurance

  • This webpage is intended to be valid in Hong Kong only and shall not be construed as an offer to sell or solicitation to buy or provision of any insurance product outside Hong Kong. Prudential and Standard Chartered do not offer or sell any insurance product in any jurisdictions outside Hong Kong in which such offering or sale of the insurance product is illegal under the laws of such jurisdictions. This webpage does not constitute a contract of insurance or an offer, invitations or recommendation to any person to enter into any contract of insurance or any transaction described therein or any similar transaction.
  • The material and information contained on this webpage should be read in conjunction with the relevant product brochure and for the risk disclosure, please refer to the product brochure.

Notes

  • This webpage does not constitute any prediction of likely future price movements.
  • Investors should not make investment decisions based on this webpage alone.
  • This webpage has not been reviewed by the Securities and Futures Commission or any regulatory authority in Hong Kong.

To borrow or not to borrow? Borrow only if you can repay!