Alternatives to Cash

cashalt

BENEFITS:

  • A high level of income
  • Downside protection
  • Low volatility (risk)
  • Diversified income strategy

Written by Diaan janse van Rensburg, Managing Director at Naviga Solutions

The interest rate on cash reduced by 44% during the past year. This has had a significant impact on investors seeking stable interest income.

There are other higher-yielding, fixed interest investments available such as floating rate notes, bonds, inflation-linked bonds, preference shares and property. These instruments can be issued by various entities such as the government, banks, or corporates. It can be a daunting task to select the appropriate income instrument. Therefore, we recommend investing in a flexible income fund. The mandate of these funds allows a manager to actively move between the various income instruments. The aim is to deliver stable income-generating returns while enhancing the yield by taking limited additional risk.

WHO SHOULD INVEST?

  • Investors seeking higher returns than money market funds
  • Investors seeking an investment horizon of 1 to 2 years
  • Investors drawing income
  • Investors that require capital protection
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