Page 34 - Waterfall City Issue 7 July 2024

Waterfall City Finance

to take advantage of market volatility
and still have easy access to cash if
the security you intend to invest in is
trading at a good entry-level.

All equity investment platforms can
offer an overnight cash product that
meets these requirements. These
cash solutions provide an overnight
interest rate but differ from provider
to provider, so choose your platform
wisely.

Investing in a money market fund
is another option for investors who
want to hold a cash position a bit
longer and are prepared to give up
the benefit of immediate access to
their funds. If you choose this option,
access to your funds can take two to Factors to consider when money market unit trusts may not keep
three days from the day you send the selecting an appropriate up with inflation, which means that the
instruction until you are disinvested vehicle value of your investment may decline
from the fund. Once the funds are When deciding on the most in real terms over time.
in your bank account, you also appropriate vehicle for cash holdings
need to factor in the time for your in your portfolio, it is important to For this reason, it is important to
bank to deposit the funds into your understand the different interest rates understand how much money you are
investment account. earned on your funds after platform comfortable keeping in cash and how
fees and the accessibility of the funds. much to invest in equities.
Most money market funds aim What you give up in accessibility, you
to maintain the value of your earn in increased interest rates. Equities are the single asset class
investment while still generating a historically shown to outperform
respectable level of income. These In addition, if a material percentage of inflation, so it is important to understand
funds provide a higher interest your portfolio is invested in cash, you the need to balance exposure to different
return than the overnight rate to need to understand the impact this asset classes to ensure you grow your
compensate you for the lack of may have on your portfolio returns. long-term wealth and achieve your
immediate access. Returns from overnight cash and ultimate investment goals.

32 Waterfall City Issue 7 2024