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Most investors have a portion of their funds sitting idle in their savings accounts, which is not the best hedge against inflation given the returns that we earn on them. Nevertheless, savings accounts are the most common means of holding cash before we need to use it for our spending needs or investments.
Therefore, holding idle cash is a problem that most investors will face. We could be waiting to take advantage of an investment opportunity (as active investors) or simply looking to dollar-cost average into the market at regular intervals (as passive investors).
Given the current volatile financial market and uncertain economic environment, more investors may prefer to be in cash. However, simply holding on to cash may generate negative returns, especially in a high inflationary environment.
This is where moomoo Cash Plus could be a solution for investors who still want to generate a decent return while waiting to deploy their cash. moomoo Cash Plus allows investors to make their idle cash work harder through a lower risk and more flexible investment in money market funds.
Cash is King, Especially During A Recession
We may have heard that “cash is king” numerous times, especially in the current volatile investing landscape. In fact, one of the greatest investors of our time, the Oracle of Omaha, Warren Buffett, is a long-time proponent of holding cash as part of his portfolio with Berkshire Hathaway.
This has allowed him to seize opportunities during market downturns, including at the height of the global financial crisis in 2008 by purchasing US$5 billion worth of Goldman Sachs special preferred shares.
Whether we are looking to make opportunistic trades or simply want to invest in the markets regularly at fixed intervals, holding onto cash equates to having liquidity to take advantage when opportunities arise. At the same time, we do not have to accept near-zero returns on our savings accounts.
How To Hedge Against High Inflation Rate?
We all know that inflation erodes the value of our money. While we are in an environment of stubbornly high inflation, the extent of it is unprecedented. In the U.S. the 9.1% inflation rate in June 2022 was the highest level seen in the past 40 years, while in Singapore, the 4.4% inflation for the same period was its highest since 2008.
Despite this, we have limited avenues to beat this inflation. For example, interest rates on our bank savings accounts continue to pay only 0.05% in spite of the sharp rise in global interest rates.
Of course, we could choose to park our cash in a fixed deposit (FD) account or even subscribe to the Singapore Savings Bonds (SSBs) to generate slightly higher interest returns. However, we have to be ready to forego some flexibility in deploying our cash immediately. We may incur some penalty fees and lose our accrued interest (if we break our FDs) or have to wait up to a month to redeem our money (in the case of SSBs).
Low returns and the inability to withdraw funds on demand limit our ability to invest when good potential opportunities present themselves.
moomoo Cash Plus Enables Investors To Hedge Against Inflation While Maintaining Flexibility Over Their Idle Funds
For the investor who does not want to compromise on the flexibility of using your funds but wants to generate a potentially decent return, you can consider moomoo Cash Plus as an alternative means of holding your spare cash.
In short, moomoo Cash Plus is a cash management service that you can find under the Money Plus tab in the moomoo brokerage app. It gives you the flexibility to invest any sums of money as you can subscribe to the Cash Plus funds for as little as $0.01 and there is no upper limit.
Furthermore, you can also redeem your money at any time to invest immediately on the moomoo app or withdraw it to your bank account as there is no lock-in period for investments in moomoo Cash Plus. What’s even better is that you will earn interest for any period that your money is invested in moomoo Cash Plus – and there are no penalties when you take your funds out to invest or withdraw into your bank account.
This may be especially relevant for money you have in transit as well. Typically, your cash sits idle, earning you next to nothing in either your savings account or brokerage account when you are in between getting out of a trade and waiting for your next investment.
It is worth noting again that you can also invest, whether it’s buying of stocks or subscribing to an IPO on the same day that you redeem your funds from moomoo Cash Plus, without incurring any margin interest on the moomoo platform.
Lastly, you will not be slapped with any additional fees for making the investment in moomoo Cash Plus as there are no subscription or redemption fees. Furthermore, the returns on Cash Plus are simple to understand since the returns, which are shown as the 7-day yield, are the net return after deducting all costs.
A Choice Of Two Funds That You Can Invest In With moomoo Cash Plus
moomoo Cash Plus provides a choice of two funds for investors in both Singapore Dollars (SGD) and US Dollars (USD):
- Fullerton Cash Fund; and
- CSOP USD Money Market Fund
While the money market funds in moomoo Cash Plus are considered relatively safe, that does not mean they are without risk of a negative return on certain days. Nevertheless, these funds have not had any negative monthly returns since their inception.
How To Subscribe To moomoo Cash Plus?
Step 1: To subscribe to the money market fund, first look for the Cash Plus icon under the Money Plus tab. Then, simply navigate to the choice of money market fund under the detailed quotes page and tap on the Subscribe button.
Source: moomoo Financial Singapore
Step 2: To find out whether you have successfully completed the transaction, you can view the progress bar under the “Trading Rules” on the subscribed money market fund’s “Detailed Quotes” page.
Source: moomoo Financial Singapore
Step 3: You will start earning immediately once the transaction is completed. To check on the returns that you have earned, simply view the “Position Details” page, which will show your total returns.
Source: moomoo Financial Singapore
Make Your Idle Funds Work Harder With The moomoo Cash Upsized
From November 1 to December 30, 2022, new account holders who open a moomoo SG Universal account and subscribe at least S$100 to Cash Plus can earn a cashback of S$2 every day for up to 10 days*. This means that if you invest S$100 each day for the 10 days, you can earn up to S$20 in cashback!
For new account holders, there is a second ongoing promotion – Cash Plus Upsized – that you can take advantage of. Unlock 3 months 5% p.a. guaranteed return rewards before 31 December 2022 and up to 6 months additional when you share the good deal with your friends!
So, hurry and Sign up with moomoo to take advantage of the current promotions to make your idle money work harder for you today!
*Cashback is given for a total of 10 days. Terms and conditions apply.