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Higher Interest Rates Are Spurring a Subtle Shift to Cash Investments. But Don't Expect to Get Rich
JUNE 2018

By James F. Peltz

Cash is creeping back.

With interest rates rising and the stock market cooling from its big gains last year, some savers and investors are placing more money into once-dormant cash-related products such as money market funds, bank certificates of deposit and Treasury securities.

The net assets of money market mutual funds totaled $2.89 trillion as of June 6, the highest level since the financial crisis in 2008-09, according to the Investment Company Institute, a mutual-fund trade group.

Still, that’s by no means a massive shift. And a spot check of financial planners and wealth management advisors in Southern California showed all were keeping roughly the same amount of cash as a percentage of their clients’ portfolios, a percentage that’s typically in the single digits because most of the money is invested in stocks and bonds.

The rise in rates is “just not enough to change the equation at this point,” said Stuart Blair, director of research at Canterbury Consulting, a Newport Beach firm that manages $18.5 billion of assets.