Cash is boring. Except in times like these. With fear running high across financial markets, cash is king again, just as it was after the tech stock crash of 2000, the market blow-up in 1987 and the meltdown of 1929. While moving into cash may not be a wholly sound choice, given that markets have historically trended upwards and rewarded those who stayed in for the long haul, it is certainly a choice that a lot of people are making now.
For one thing, investors have been cashing in mutual fund shares like nobody's business. According to the latest statistics from the Investment Company Institute, an industry association for mutual funds in the US, investors redeemed 12.1 per cent of their stock fund shares in September, continuing a summer-long trend of outflows. Even bond and money market funds - safe havens in normal times - have seen outflows in recent months.
Meanwhile, super-safe investments like US Treasury bonds have spiked since volatility hit in the summer. Yields on US treasury bills, which go down as prices go up, hit a low on Sept 20 of just 0.03 per cent. That means people were buying an investment that promised them returns of nearly zero in exchange for safety.
If you, too, are dialling back your risk this autumn, US Treasuries may not be your best bet given their low yields. Still, there are plenty of investments out there, from offshore savings accounts to money market funds, that can protect your savings while giving you respectable returns.
Your safest asset, of course, is cash itself - the cold, hard stuff you store under your mattress. The only problem with cash is that you pay a high price for that safety. It's what accountants call the "opportunity cost" that you pass by when you do not invest. If you could have made a guaranteed return of 3 per cent by, for example, putting the money in a term deposit account, your languishing cash effectively lost you that much. Keeping your money in cash also subjects you to the perils of inflation, which eats into the amount of goods and services you can buy with your money.
Savings accounts and term deposits rank just below cash on the safety spectrum, but they offer a bit of interest to offset those lost opportunity costs. These instruments are held at banks, where your principal risk is the failure of the institution. Which means you're safe. Despite the recent wave of bank implosions, failures are extremely rare. And amid the financial crisis, countries from Ireland to Australia have been guaranteeing deposits, adding a new layer of safety. The UAE recently announced the Government would protect deposits at all national and most foreign banks.That virtually assures the security of your money. There's only one problem: it's hard to find good rates in the UAE. Among the highest-yielding savings accounts in the UAE are the Bank of Sharjah's and Mashreq's, which yield 3 per cent and 2.5 per cent, respectively.
That makes moving savings offshore a measure worth considering. In addition to strong regulations and deposit insurance, offshore accounts often offer hard-to-beat interest rates. Clydesdale Bank International, for example, was recently offering 3.96 per cent yearly interest on a current account. See moneyfacts.co.uk for a listing of the best rates.
If you are an expatriate, putting your cash in well-regulated environments like Jersey or the Isle of Man makes even more sense because it exempts you from the UAE's Shariah-inspired inheritance courts, which can take months to process non-Muslims' estates. "Let's say you sold a property today and got US$400,000 (Dh1.5 million) for it and you decided to keep it liquid because you were worried about the markets," said Richard Determeyer, the UAE-based senior regional manager at HSBC's offshore bank department. "We would be advising you to put it offshore."
A third and final option for safe investing: the money market fund. These invest in ultra-short term securities - overnight loans, for example - to generate better-than-cash returns. Though they come with no deposit insurance, they traditionally have posted higher yields than the typical savings account. In September, however, a money market fund Reserve Primary Fund (RPFXX) "broke the buck", dipping below its fixed US$1 net asset value. It had bought Lehman Brothers bonds that lost their value when the company went bankrupt.
Reserve Primary lost money, in other words. That is not supposed to happen in a savings account. Yet the US government stepped in after the Reserve Primary incident to help keep short-term lending markets going, and thanks to such governmental actions the risk of losing your shirt in a money market fund is minuscule.
So don't worry and be happy- this crisis will pass, whether you keep your dirhams in a savings account or in a safe at home.
afitch@thenational.ae
The Details
Article 15
Produced by: Carnival Cinemas, Zee Studios
Directed by: Anubhav Sinha
Starring: Ayushmann Khurrana, Kumud Mishra, Manoj Pahwa, Sayani Gupta, Zeeshan Ayyub
Our rating: 4/5
UAE currency: the story behind the money in your pockets
Ferrari 12Cilindri specs
Engine: naturally aspirated 6.5-liter V12
Power: 819hp
Torque: 678Nm at 7,250rpm
Price: From Dh1,700,000
Available: Now
F1 The Movie
Starring: Brad Pitt, Damson Idris, Kerry Condon, Javier Bardem
Director: Joseph Kosinski
Rating: 4/5
Electric scooters: some rules to remember
- Riders must be 14-years-old or over
- Wear a protective helmet
- Park the electric scooter in designated parking lots (if any)
- Do not leave electric scooter in locations that obstruct traffic or pedestrians
- Solo riders only, no passengers allowed
- Do not drive outside designated lanes
JAPANESE GRAND PRIX INFO
Schedule (All times UAE)
First practice: Friday, 5-6.30am
Second practice: Friday, 9-10.30am
Third practice: Saturday, 7-8am
Qualifying: Saturday, 10-11am
Race: Sunday, 9am-midday
Race venue: Suzuka International Racing Course
Circuit Length: 5.807km
Number of Laps: 53
Watch live: beIN Sports HD
Student Of The Year 2
Director: Punit Malhotra
Stars: Tiger Shroff, Tara Sutaria, Ananya Pandey, Aditya Seal
1.5 stars
Company%20profile
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THE LIGHT
Director: Tom Tykwer
Starring: Tala Al Deen, Nicolette Krebitz, Lars Eidinger
Rating: 3/5
Company%20profile
%3Cp%3E%3Cbr%3E%3Cstrong%3EName%3A%3C%2Fstrong%3E%20Khodar%3Cbr%3E%3Cstrong%3EBased%3A%3C%2Fstrong%3E%20Cairo%20and%20Alexandria%2C%20in%20Egypt%3Cbr%3E%3Cstrong%3EFounders%3A%3C%2Fstrong%3E%20Ayman%20Hamza%2C%20Yasser%20Eidrous%20and%20Amr%20El%20Sheikh%3Cbr%3E%3Cstrong%3ESector%3A%3C%2Fstrong%3E%20agriculture%20technology%3Cbr%3E%3Cstrong%3EFunding%3A%3C%2Fstrong%3E%20%24500%2C000%3Cbr%3E%3Cstrong%3EInvestors%3A%3C%2Fstrong%3E%20Saudi%20Arabia%E2%80%99s%20Revival%20Lab%20and%20others%3Cbr%3E%3Cstrong%3EEmployees%3A%3C%2Fstrong%3E%2035%3C%2Fp%3E%0A
What is graphene?
Graphene is extracted from graphite and is made up of pure carbon.
It is 200 times more resistant than steel and five times lighter than aluminum.
It conducts electricity better than any other material at room temperature.
It is thought that graphene could boost the useful life of batteries by 10 per cent.
Graphene can also detect cancer cells in the early stages of the disease.
The material was first discovered when Andre Geim and Konstantin Novoselov were 'playing' with graphite at the University of Manchester in 2004.
The specs
- Engine: 3.9-litre twin-turbo V8
- Power: 640hp
- Torque: 760nm
- On sale: 2026
- Price: Not announced yet
Specs
Engine: Duel electric motors
Power: 659hp
Torque: 1075Nm
On sale: Available for pre-order now
Price: On request
Conflict, drought, famine
Estimates of the number of deaths caused by the famine range from 400,000 to 1 million, according to a document prepared for the UK House of Lords in 2024.
It has been claimed that the policies of the Ethiopian government, which took control after deposing Emperor Haile Selassie in a military-led revolution in 1974, contributed to the scale of the famine.
Dr Miriam Bradley, senior lecturer in humanitarian studies at the University of Manchester, has argued that, by the early 1980s, “several government policies combined to cause, rather than prevent, a famine which lasted from 1983 to 1985. Mengistu’s government imposed Stalinist-model agricultural policies involving forced collectivisation and villagisation [relocation of communities into planned villages].
The West became aware of the catastrophe through a series of BBC News reports by journalist Michael Buerk in October 1984 describing a “biblical famine” and containing graphic images of thousands of people, including children, facing starvation.
Band Aid
Bob Geldof, singer with the Irish rock group The Boomtown Rats, formed Band Aid in response to the horrific images shown in the news broadcasts.
With Midge Ure of the band Ultravox, he wrote the hit charity single Do They Know it’s Christmas in December 1984, featuring a string of high-profile musicians.
Following the single’s success, the idea to stage a rock concert evolved.
Live Aid was a series of simultaneous concerts that took place at Wembley Stadium in London, John F Kennedy Stadium in Philadelphia, the US, and at various other venues across the world.
The combined event was broadcast to an estimated worldwide audience of 1.5 billion.
Blackpink World Tour [Born Pink] In Cinemas
Starring: Rose, Jisoo, Jennie, Lisa
Directors: Min Geun, Oh Yoon-Dong
Rating: 3/5
What can victims do?
Always use only regulated platforms
Stop all transactions and communication on suspicion
Save all evidence (screenshots, chat logs, transaction IDs)
Report to local authorities
Warn others to prevent further harm
Courtesy: Crystal Intelligence
Sarfira
Director: Sudha Kongara Prasad
Starring: Akshay Kumar, Radhika Madan, Paresh Rawal
Rating: 2/5
The%20specs%20
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COMPANY PROFILE
Name: Rain Management
Year started: 2017
Based: Bahrain
Employees: 100-120
Amount raised: $2.5m from BitMex Ventures and Blockwater. Another $6m raised from MEVP, Coinbase, Vision Ventures, CMT, Jimco and DIFC Fintech Fund
WITHIN%20SAND
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A timeline of the Historical Dictionary of the Arabic Language
- 2018: Formal work begins
- November 2021: First 17 volumes launched
- November 2022: Additional 19 volumes released
- October 2023: Another 31 volumes released
- November 2024: All 127 volumes completed
How to watch Ireland v Pakistan in UAE
When: The one-off Test starts on Friday, May 11
What time: Each day’s play is scheduled to start at 2pm UAE time.
TV: The match will be broadcast on OSN Sports Cricket HD. Subscribers to the channel can also stream the action live on OSN Play.
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UAE currency: the story behind the money in your pockets
SHAITTAN
%3Cp%3E%3Cstrong%3EDirector%3A%20%3C%2Fstrong%3EVikas%20Bahl%3Cbr%3E%3Cstrong%3EStarring%3A%20%3C%2Fstrong%3EAjay%20Devgn%2C%20R.%20Madhavan%2C%20Jyothika%2C%20Janaki%20Bodiwala%3Cbr%3E%3Cstrong%3ERating%3A%20%3C%2Fstrong%3E3%2F5%3C%2Fp%3E%0A
Lexus LX700h specs
Engine: 3.4-litre twin-turbo V6 plus supplementary electric motor
Power: 464hp at 5,200rpm
Torque: 790Nm from 2,000-3,600rpm
Transmission: 10-speed auto
Fuel consumption: 11.7L/100km
On sale: Now
Price: From Dh590,000
COMPANY PROFILE
Name: Xpanceo
Started: 2018
Founders: Roman Axelrod, Valentyn Volkov
Based: Dubai, UAE
Industry: Smart contact lenses, augmented/virtual reality
Funding: $40 million
Investor: Opportunity Venture (Asia)
Liz%20Truss
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Joker: Folie a Deux
Starring: Joaquin Phoenix, Lady Gaga, Brendan Gleeson
Director: Todd Phillips
Rating: 2/5
Brief scores:
Newcastle United 1
Perez 23'
Wolverhampton Rovers 2
Jota 17', Doherty 90' 4
Red cards: Yedlin 57'
Man of the Match: Diogo Jota (Wolves)
