{"id":32819,"date":"2023-07-07T18:22:42","date_gmt":"2023-07-07T22:22:42","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/dont-cling-to-cash-check-out-these-other-low-risk-income-investments\/"},"modified":"2023-07-07T18:22:44","modified_gmt":"2023-07-07T22:22:44","slug":"dont-cling-to-cash-check-out-these-other-low-risk-income-investments","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=32819","title":{"rendered":"Don\u2019t Cling to Cash. Check Out These Other Low-Risk Income Investments."},"content":{"rendered":"
\n
<\/p>\n
<\/p>\n<\/figure><\/div>\n

These are the halcyon days of cash. Money-market funds and Treasury bills offer yields around 5% with virtually no credit or interest-rate risk. Longer-term Treasuries yield less than short-term ones, a condition known as an inverted yield curve, so there is no immediate upside for venturing into later maturities. Plus, yield-curve inversion is a remarkably prescient harbinger of a future recession, making corporate bonds unappealing.<\/p>\n

\n

But while cash might seem perfect now, it has longer-term risks. Michael Arone, an investment strategist at State Street Global Advisors, raises the specter of reinvestment risk, or the danger that when rates eventually fall, cash investors will have to reinvest at lower rates. He recommends a barbell approach, by being overweight cash on one end and high-quality, longer-duration securities at the other end. \u201cNow you\u2019re able to pick up investment-grade assets with significant yield to offset some of that reinvestment risk,\u201d he says. <\/p>\n

Another plus: When the impact of the Federal Reserve\u2019s interest-rate hikes inevitably leads to a slower U.S. economy, yields will fall, and if you own a few intermediate securities, you could participate in the upside as those securities appreciate in price. \u201cIf you stay in cash, you would miss out on potential bond market rallies in the next year,\u201d says Dhruv Nagrath, director of fixed-income strategy at BlackRock. <\/p>\n

That message may fall on deaf ears right now. Bond prices have fallen in July as yields have risen sharply. The 10-year Treasury note topped 4% this past Thursday for the first time since March. Inflation remains elevated, and another Fed rate hike is expected this month. An exchange-traded fund tracking a broad bond benchmark,
\n iShares Core U.S. Aggregate Bond
\n (ticker: AGG), is down about 3% in the past three months.<\/p>\n

Nonetheless, long-term investors, especially those in retirement who are looking for consistent income, should prepare now for an eventual peak in yields and add some longer-duration securities. <\/p>\n

The good news: You can get a bit more yield than cash and still stay in high-quality securities if you look in some less obvious corners of the fixed-income markets. Preferred shares, often issued by large and highly rated banks, yield around 6%. Likewise, agency mortgage-backed securities have little credit risk or prepayment risk because many homeowners are holding on to their 3% mortgages.<\/p>\n

\u201cPreferreds offer an interesting opportunity in an investment-grade asset with yields of more than 6%,\u201d says Arone. They are also relatively cheap due to the regional-bank crisis in March. \u201cRarely is there this big a discount to par for preferreds,\u201d he notes. State Street\u2019s offering is the
\n SPDR ICE Preferred Securities
\n ETF (PSK), which yields 5.72%.<\/p>\n

Cliff Corso, chief investment officer at Advisors Asset Management, likes shorter-term preferreds issued by big banks and energy companies. His firm\u2019s
\n AAM Low Duration Preferred & Income Securities
\n ETF (PFLD) yields close to 7%. <\/p>\n

Nagrath has other high-quality securities on his list, including longer-term Treasuries. \u201cRecession is going to creep into the narrative,\u201d he says. \u201cHaving some longer-duration Treasuries is a prudent thing.\u201d He suggests investors add an ETF that tracks a bond benchmark, such as iShares\u2019 Core Bond offering, which has an intermediate duration and yields 4.12%. <\/p>\n

Inflation-protected Treasuries, agency MBS, and local-currency emerging market debt are also in BlackRock\u2019s fixed-income playbook now. Nagrath is less a fan of preferreds because of their exposure to the financial sector. The
\n iShares Preferred & Income Securities
\n ETF (PFF) offers a 6.62% yield, but 70% of assets are in bank preferreds. Still, it\u2019s hard to argue against a modest allocation to that sector. B<\/p>\n

Write to <\/strong>Amey Stone at amey.stone@barrons.com<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

These are the halcyon days of cash. Money-market funds and Treasury bills offer yields around 5% with virtually no credit or interest-rate risk. Longer-term Treasuries yield less than short-term ones, a condition known as an inverted yield curve, so there is no immediate upside for venturing into later maturities. Plus, yield-curve inversion is a remarkably […]<\/p>\n","protected":false},"author":1,"featured_media":32820,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-32819","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"\nDon\u2019t Cling to Cash. Check Out These Other Low-Risk Income Investments. | iFintechWorld<\/title>\n<meta name=\"description\" content=\"These are the halcyon days of cash. Money-market funds and Treasury bills offer yields around 5% with virtually no credit or interest-rate risk.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/ifintechworld.com\/?p=32819\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Don\u2019t Cling to Cash. Check Out These Other Low-Risk Income Investments. | iFintechWorld\" \/>\n<meta property=\"og:description\" content=\"These are the halcyon days of cash. Money-market funds and Treasury bills offer yields around 5% with virtually no credit or interest-rate risk.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/ifintechworld.com\/?p=32819\" \/>\n<meta property=\"og:site_name\" content=\"iFintechWorld\" \/>\n<meta property=\"article:published_time\" content=\"2023-07-07T22:22:42+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-07-07T22:22:44+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/07\/1688768562_social.jpeg\" \/>\n\t<meta property=\"og:image:width\" content=\"1280\" \/>\n\t<meta property=\"og:image:height\" content=\"640\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"News Room\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"News Room\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/ifintechworld.com\/?p=32819#article\",\"isPartOf\":{\"@id\":\"https:\/\/ifintechworld.com\/?p=32819\"},\"author\":{\"name\":\"News Room\",\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/person\/6224724fd4116361255b179dc5c70b61\"},\"headline\":\"Don\u2019t Cling to Cash. Check Out These Other Low-Risk Income Investments.\",\"datePublished\":\"2023-07-07T22:22:42+00:00\",\"dateModified\":\"2023-07-07T22:22:44+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/ifintechworld.com\/?p=32819\"},\"wordCount\":610,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/ifintechworld.com\/#organization\"},\"keywords\":[\"Featured\"],\"articleSection\":[\"Markets\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/ifintechworld.com\/?p=32819#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/ifintechworld.com\/?p=32819\",\"url\":\"https:\/\/ifintechworld.com\/?p=32819\",\"name\":\"Don\u2019t Cling to Cash. Check Out These Other Low-Risk Income Investments. | iFintechWorld\",\"isPartOf\":{\"@id\":\"https:\/\/ifintechworld.com\/#website\"},\"datePublished\":\"2023-07-07T22:22:42+00:00\",\"dateModified\":\"2023-07-07T22:22:44+00:00\",\"description\":\"These are the halcyon days of cash. Money-market funds and Treasury bills offer yields around 5% with virtually no credit or interest-rate risk.\",\"breadcrumb\":{\"@id\":\"https:\/\/ifintechworld.com\/?p=32819#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/ifintechworld.com\/?p=32819\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/ifintechworld.com\/?p=32819#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/ifintechworld.com\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Don\u2019t Cling to Cash. Check Out These Other Low-Risk Income Investments.\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/ifintechworld.com\/#website\",\"url\":\"https:\/\/ifintechworld.com\/\",\"name\":\"Repay Down\",\"description\":\"Latest Personal Finance News, Tips and Updates\",\"publisher\":{\"@id\":\"https:\/\/ifintechworld.com\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/ifintechworld.com\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\/\/ifintechworld.com\/#organization\",\"name\":\"Repay Down\",\"url\":\"https:\/\/ifintechworld.com\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/logo\/image\/\",\"url\":\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/rep-logo-dark.png\",\"contentUrl\":\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/rep-logo-dark.png\",\"width\":558,\"height\":90,\"caption\":\"Repay Down\"},\"image\":{\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/logo\/image\/\"}},{\"@type\":\"Person\",\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/person\/6224724fd4116361255b179dc5c70b61\",\"name\":\"News Room\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/avatar_user_1_1682606986-96x96.png\",\"contentUrl\":\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/avatar_user_1_1682606986-96x96.png\",\"caption\":\"News Room\"},\"sameAs\":[\"https:\/\/ifintechworld.com\"],\"url\":\"https:\/\/ifintechworld.com\/?author=1\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Don\u2019t Cling to Cash. Check Out These Other Low-Risk Income Investments. | iFintechWorld","description":"These are the halcyon days of cash. Money-market funds and Treasury bills offer yields around 5% with virtually no credit or interest-rate risk.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/ifintechworld.com\/?p=32819","og_locale":"en_US","og_type":"article","og_title":"Don\u2019t Cling to Cash. Check Out These Other Low-Risk Income Investments. | iFintechWorld","og_description":"These are the halcyon days of cash. Money-market funds and Treasury bills offer yields around 5% with virtually no credit or interest-rate risk.","og_url":"https:\/\/ifintechworld.com\/?p=32819","og_site_name":"iFintechWorld","article_published_time":"2023-07-07T22:22:42+00:00","article_modified_time":"2023-07-07T22:22:44+00:00","og_image":[{"width":1280,"height":640,"url":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/07\/1688768562_social.jpeg","type":"image\/jpeg"}],"author":"News Room","twitter_card":"summary_large_image","twitter_misc":{"Written by":"News Room","Est. reading time":"3 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/ifintechworld.com\/?p=32819#article","isPartOf":{"@id":"https:\/\/ifintechworld.com\/?p=32819"},"author":{"name":"News Room","@id":"https:\/\/ifintechworld.com\/#\/schema\/person\/6224724fd4116361255b179dc5c70b61"},"headline":"Don\u2019t Cling to Cash. Check Out These Other Low-Risk Income Investments.","datePublished":"2023-07-07T22:22:42+00:00","dateModified":"2023-07-07T22:22:44+00:00","mainEntityOfPage":{"@id":"https:\/\/ifintechworld.com\/?p=32819"},"wordCount":610,"commentCount":0,"publisher":{"@id":"https:\/\/ifintechworld.com\/#organization"},"keywords":["Featured"],"articleSection":["Markets"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/ifintechworld.com\/?p=32819#respond"]}]},{"@type":"WebPage","@id":"https:\/\/ifintechworld.com\/?p=32819","url":"https:\/\/ifintechworld.com\/?p=32819","name":"Don\u2019t Cling to Cash. Check Out These Other Low-Risk Income Investments. | iFintechWorld","isPartOf":{"@id":"https:\/\/ifintechworld.com\/#website"},"datePublished":"2023-07-07T22:22:42+00:00","dateModified":"2023-07-07T22:22:44+00:00","description":"These are the halcyon days of cash. Money-market funds and Treasury bills offer yields around 5% with virtually no credit or interest-rate risk.","breadcrumb":{"@id":"https:\/\/ifintechworld.com\/?p=32819#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/ifintechworld.com\/?p=32819"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/ifintechworld.com\/?p=32819#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/ifintechworld.com\/"},{"@type":"ListItem","position":2,"name":"Don\u2019t Cling to Cash. Check Out These Other Low-Risk Income Investments."}]},{"@type":"WebSite","@id":"https:\/\/ifintechworld.com\/#website","url":"https:\/\/ifintechworld.com\/","name":"Repay Down","description":"Latest Personal Finance News, Tips and Updates","publisher":{"@id":"https:\/\/ifintechworld.com\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/ifintechworld.com\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/ifintechworld.com\/#organization","name":"Repay Down","url":"https:\/\/ifintechworld.com\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/ifintechworld.com\/#\/schema\/logo\/image\/","url":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/rep-logo-dark.png","contentUrl":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/rep-logo-dark.png","width":558,"height":90,"caption":"Repay Down"},"image":{"@id":"https:\/\/ifintechworld.com\/#\/schema\/logo\/image\/"}},{"@type":"Person","@id":"https:\/\/ifintechworld.com\/#\/schema\/person\/6224724fd4116361255b179dc5c70b61","name":"News Room","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/ifintechworld.com\/#\/schema\/person\/image\/","url":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/avatar_user_1_1682606986-96x96.png","contentUrl":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/avatar_user_1_1682606986-96x96.png","caption":"News Room"},"sameAs":["https:\/\/ifintechworld.com"],"url":"https:\/\/ifintechworld.com\/?author=1"}]}},"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/posts\/32819","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=32819"}],"version-history":[{"count":1,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/posts\/32819\/revisions"}],"predecessor-version":[{"id":32821,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/posts\/32819\/revisions\/32821"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/media\/32820"}],"wp:attachment":[{"href":"https:\/\/ifintechworld.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=32819"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=32819"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=32819"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}