Why cash is no longer king

At the height of the rate cycle, holding six to twelve months of expenditure in cash made sense. For many clients, it still does — but the case for large cash allocations has weakened.

Real returns matter

With inflation at 3–4% and best-buy savings rates closer to 4%, real returns on cash are near zero. Equities and diversified bonds have historically delivered positive real returns over ten-year periods, albeit with volatility.

Duration risk in bond funds

Clients who moved into bond funds during the rate rise should review duration exposure. We favour shorter-dated credit and strategic equity income for balanced portfolios in the current environment.

A phased approach

For clients nervous about markets, phased investment over six to nine months remains our preferred approach — it reduces timing risk without indefinitely deferring deployment.