Is it madness to invest in cash? Spectator Money investigates

Is it madness to invest in cash? The simple answer is yes, but as with anything to do with investing, it is far more complex than that.

We are living in a world of low returns, less liquidity, tighter regulation, increased competition and globalisation. When you include the advances in technology, it is clear to see why there has been a reduction in the competitive advantage for many firms, resulting in lower returns for shareholders.

It is therefore understandable that investors worry and wonder about what to do. Some choose not to do anything and stay invested in cash. Unfortunately, it has been a difficult time for savers to enjoy any real returns on their savings. Those waiting for a better, more predictable future to begin investing again have seen the value of capital erode and have suffered significant opportunity costs.

The prospects for fixed income aren’t much better. In fact, the outlook does not look attractive over the medium to long-term.