Investment product called Cash

Heard of investment called Cash? Not doing anything with your cash except placing them in fixed deposits, is an investment decision. The return may be minuscule but at least the principal sum is protected.


I heard one insurance agent acquaintance mentioned early last year that she would be holding on to cash and not investing. She predicted the down cycle for the equity markets before anyone else. She will wait out and let the downturn blow over before investing again. That may take several years later. It was a smart investment move. When many were caught with bad investment decisions, she was probably sitting pretty with her cash intact.


Whatever investment products you bought within this year, you will probably see their values declined. The investments below show the extent of possible losses. Most were near to this year’s low values, off their peaks in the year.


                                      at 16/9/08    YTD High   YTD Low

Gold (per oz)                 US$780          US$1030    US$739

Brent crude oil               US$91            US$147     US$85

Singapore stocks (STI)    2461              3474         2412

US stocks (Dow)            10917             13279       10827

Australian dollars           S$1.1300        S$1.3251   S$1.1255

New Zealand dollars     S$0.9316        S$1.1483   S$0.9281

Euro currency                 S$2.0314        S$2.2064   S$2.0070


(Source: The Business Times, 17 September 2008)


With the bankruptcy of Lehman Brothers, this added to the woes of investors. Who would expect Lehman Brothers, a 158-year old investment bank, to fail spectacularly? Investors that bought Minibonds arranged by Lehman Brothers will have to wait to see how much they can get back from this investment. It could be as good writing off this investment sum.


On hind sight, it is good to hold on to your cash, especially now when the US financial crisis has still a way to go before a clearer picture emerges.


Written on 9/17/2008 3:33 PM


Copyright © 2008, the author known as LKT in Singapore.


The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.

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