Worried about markets, or chasing a better rate on your cash?

Two questions come up more than any others right now.

The first is some version of "markets are at all-time highs, should I get out into cash?" The second is "my cash is sitting there doing nothing while rates rise — how do I get a better return on it?"

They arrive together, which is understandable. But they're different problems with different answers, and running them together is how investors end up selling a long-term portfolio to chase a short-term rate — then finding it very hard to get back in.

Worth taking one at a time.

 Part 1: If you're worried about markets

The instinct is often felt binary; stay in or get out. In practice, three things are worth remembering before you do anything.

Getting out is one decision. Getting back in is a second, harder one.

Markets have historically tended to recover while the news is still bad. The exit feels decisive and the re-entry rarely does, which is why investors who move to cash often find they stay there longer than they first intended.

If selling is on the table, it's worth deciding in advance what would bring you back — a date, a level, a change in circumstances — and writing it down. A plan you can't articulate isn't really a plan.

The question is your timeframe, not the market's direction.

"What will markets do?" is unanswerable. "When do I need this money?" isn't. The general relationship is that the longer money can stay invested, the more short-term volatility a portfolio has time to absorb — and money that's needed soon is generally less suited to growth assets in the first place. Where your own line falls between those two depends on your goals, income and obligations, which is a question for you and your adviser rather than a rule of thumb.

Wanting less risk and wanting no risk aren't the same thing.

If you're losing sleep over it, that's worth paying attention to. But there's a lot of ground between fully invested and fully out. Holding foreseeable near-term spending in cash reduces the risk of being forced to sell at an unwanted time. Rebalancing back to original target weights after a strong run reduces growth exposure without requiring any view on what happens next.

Selling also crystallises capital gains or losses, so the tax position is generally worth understanding before rather than after.

Doing nothing is still a decision. Just make it deliberately.

Part 2: If you want a better rate on your cash

Once you've decided some money should sit in cash or more stable income oriented assets, there are a few options to consider.

Note: For borrowers, an offset account or extra repayment is worth comparing against the options below. Reducing non-deductible interest is not taxed as income, unlike interest earned. Treatment differs for investment loans, where interest may be deductible.

As at mid-2026, common cash related ETFs distributions sat within a range of roughly half a percentage point of each other between 4-5%. Advertised bank savings rates spanned a much wider range (very roughly 4% to 6%), depending on the product, whether bonus conditions were met, and in some cases the account holder's age or balance. An advertised bonus rate is only worth the months you actually qualify for. Note these rates change frequently.

Route 1: A cash or income managed portfolio

A professionally constructed and maintained allocation — you own the underlying holdings, but the strategy is monitored and rebalanced for you. 

What it gives you: Diversification across issuers and instruments without you assembling it yourself. Ongoing maintenance, so it doesn't decay the way a set-and-forget holding does. For income strategies specifically, access to a broader opportunity set than a single cash product.

Costs you: A management fee. Rebalancing may generate transactions and CGT events. And if it's an income portfolio rather than a cash portfolio, the yield is generated by taking some combination of credit, interest-rate and market risk.

Read the holdings. Some accumulation-style products offered in the market hold illiquid (e.g. private credit) or lower-grade credit. Read through the product offering, if a product is yielding meaningfully more than the cash rate, typically that excess is compensation for risk.

Commonly used for: An ongoing, maintained allocation rather than a parking spot.

Route 2: A cash ETF on the ASX

Products in this category, classic examples in Australia are Betashares' AAA ETF, iShares' BILL ETF, or VanEck’s MONY ETF (launched in February 2026). These ETFs all differ but typically hold bank deposits or short-dated money market instruments, pay distributions regularly and trade on the exchange like any other listed security. These are examples selected to illustrate the differences, not recommendations, and other products are available, as at 30 June 2026:

How to get exposure: Selfwealth’s brokerage platform has all these ETFs readily available for you to invest in, with HIN Ownership and no transfer delay.

Gives you: The cash sits inside your brokerage account alongside everything else, so redeploying into equities is a sell and a buy rather than a bank transfer. No lock-up — buy or sell any trading day.

Costs you: An expense ratio, brokerage each way, and the spread. You're a unitholder, not a depositor, so the Financial Claims Scheme doesn't cover your units even where the fund's underlying assets are bank deposits. Unit prices are typically stable, but not fixed, and each sale is a CGT event. The calculation worth doing before you commit: total round-trip cost divided by the amount you're investing, compared against the extra yield you expect over your intended holding period. On small parcels held briefly, the costs can account for a significant share of the yield difference you're chasing; on large parcels held for longer, they become negligible.

Worth knowing: These are not interchangeable. Fees range, and the "enhanced" variants hold floating-rate notes and commercial paper rather than pure deposits (more yield, more risk). Read the PDS and TMD.

Commonly used for: Allows money to be parked, earning but ready; cash you intend to put back to work, or a defensive allocation you want visible alongside your portfolio.

Route 3: A bank — savings account or term deposit

Gives you: Capital stability, usually no management fee or brokerage, and Financial Claims Scheme cover up to $250,000 per account holder per ADI.

Costs you: Rates are set at the bank's discretion and can move without you doing anything. The best rates usually come with conditions (minimum monthly deposits, no withdrawals, bonus criteria) that need active monitoring. Term deposits lock your money up, and breaking one early generally means an interest penalty.

The practical friction: The money sits outside your investing account. If your plan is to redeploy it into markets at some point, there's a transfer step and a delay between deciding and acting.

Commonly used for: Emergency buffers, known near-term expenses, and money where capital certainty and government-backed protection are the priority.

Five questions before you act

1. What is this money for, and when will I realistically need it?

2. Has my situation changed, or just the headlines? A changed timeframe, income or obligation is different from a bad week.

3. What's the return after tax, fees and inflation? Including CGT on anything you sell to get there.

4. What am I giving up for the extra yield? Considerations such as access, credit quality, capital stability or fees.

5. What would make me reverse this decision — and have I written it down?

The point

None of this is an argument against holding cash. Cash is a legitimate asset class, it does a real job, and there are periods where holding more of it is exactly right.

The argument is that the decision should be deliberate — sized to a purpose, priced for its costs, and made with a clear view of what you're trading away — rather than a reaction to a difficult few weeks.

If you're not sure which category your situation falls into, that's a reasonable point at which to speak to a licensed financial adviser who can look at your full position.

Sources

1. Indicative annualised distribution yield based on the latest monthly distribution annualised (×12) or based on the latest monthly distribution per unit divided by NAV per unit × 12. Figures as published by each issuer and may be calculated on different bases. Actual future distributions will vary with prevailing short-term interest rates.

2. 12-month trailing distribution yield is based on distributions paid over the past 12 months and may be lower or higher than the current income run-rate due to changes in interest rates. MONY does not have a 12-month trailing distribution yield as it has not yet traded for a full year. Past performance is not a reliable indicator of future performance

3.  MONY listed on the ASX in February 2026 and does not yet have 12 months of distribution history.