“Now that brokerage houses are paying next to nothing on cash as a way to offset the cost of commission-less trades, it is more important than ever to seek out non-sweep money fund alternatives,” Karimzad says.
Cash, Ogorek adds, can also be an effective investment for when equities are cheaply priced and the client can take advantage of it.
And cash can also save the client when stocks are pricey, Karimzad says.
For instance, six-month certificates of deposit, the LendingTree study said, did very well at the beginning of the period known as the lost decade. That’s when CDs had the longest time of beating stocks, a 33-month period from 2000 to 2003.
“The one-year return of six-month CDs beat the one-year return of stocks for 33 consecutive months,” according to the study.
That’s almost three years when stocks were “trash.” To rephrase the Bard of Avon, all that glitters is not equities, often you have heard this told.