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Now is a good time to hold cash, according to Ray Dalio, the influential founder of hedge fund giant Bridgewater Associates. “Even though interest rates are rising, I don’t want to own debt securities, like bonds, at this time,” he said.
Why is this important?
Tightening central banks’ monetary policy makes debt more expensive. Because of increases in interest rates, governments and companies have to pay more interest when, for example, they issue bonds. This is of course good news for those who want to buy debt securities. Those who already own bonds will see the value of those investments decline as interest rates rise.In the news: Due to rising interest rates, more and more investors are once again interested in fixed income assets, such as bonds.
- However, according to Dalio, now is not the time to invest in debt securities. Speaking at the Milken Asia Institute Summit in Singapore, he said he currently does not want to own debt. “Temporarily, right now, I think it’s a good idea to keep cash,” he said.
- US bond yields are rising, just like in our trick
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