Why Now Could be a Good Opportunity to Put Your Cash to Work

After a turbulent few years of aggressive rate hikes, the Federal Reserve began easing monetary policy in late 2024, cutting the federal funds rate three times for a total reduction of 100 basis points. These cuts brought the rate down to a range of 4.25% to 4.50%, where it’s been for the entire 2025 calendar year thus far. With inflation stabilizing and labor market concerns rising, the Fed is widely expected to initiate another rate cut in September 2025—likely by 25 basis points. While the exact trajectory of future cuts remains uncertain, the consensus among economists and market watchers is that the Fed will continue to ease rates in 2025, with projections suggesting an additional 50 basis points of cuts over the year and likely continue into 2026.

This shift in monetary policy presents a compelling opportunity for investors to move cash off the sidelines and into stocks and bonds. Holding cash in a high-rate environment made sense when savings accounts and money market funds offered attractive yields. But as rates fall, those returns will diminish, making cash a less productive asset. In contrast, both equities and fixed income instruments tend to benefit from a lower interest rate environment.

Why Stocks Look Attractive

Lower interest rates reduce borrowing costs for businesses, which can boost corporate earnings and, in turn, stock prices. Historically, rate cuts have been associated with bullish equity markets, especially when cuts are made to support economic growth rather than respond to a crisis. With the economy still showing signs of resilience — GDP growth remains robust and unemployment is relatively low — the current rate cut cycle is more about fine-tuning than emergency stimulus. This creates a favorable backdrop for equities, particularly in sectors like consumer discretionary, technology, and industrials, which tend to outperform when rates fall.

Moreover, as yields on cash and short-term instruments decline, investors often rotate into riskier assets in search of better returns. This “search for yield” can drive up demand for stocks, further supporting price appreciation. For long-term investors, this is a prime moment to consider increasing exposure to high-quality U.S. large-cap stocks and international equities, which offer diversification and growth potential.

Bond Markets Are Also Poised to Benefit

Fixed-income investors stand to gain as well. When interest rates fall, bond prices typically rise, especially for longer-duration bonds. This makes now an opportune time to lock in yields before they decline further. Intermediate-duration investment-grade bonds, municipal bonds, and even select high-yield instruments can offer attractive risk-adjusted returns in a falling rate environment.

The Cost of Sitting in Cash

While cash offers safety and liquidity, it also comes with opportunity cost—especially when inflation erodes purchasing power and interest rates are falling. With the Fed signaling a continued easing cycle, the returns on cash and cash-like instruments are likely to decline, making it harder to preserve wealth in real terms. In contrast, a diversified portfolio of stocks and bonds can provide both income and capital appreciation, helping investors stay ahead of inflation and meet long-term financial goals.

Final Thoughts

The Fed’s pivot toward rate cuts marks a turning point in the investment landscape. While uncertainty remains, the odds favor a continued easing cycle that supports asset prices. For investors holding excess cash, now is the time to reassess your strategy. By reallocating into equities and bonds, you can position your portfolio to benefit from the changing interest rate environment—and avoid the drag of diminishing cash returns. To make the most of this shifting rate environment, consider our professionally managed portfolios—designed to capture upside in equities and bonds while offering exposure to alternative assets like gold, silver and alternative fund strategies for added diversification and inflation protection.

Give us a call to talk about your excess cash and how to utilize it effectively.

All investing involves risk including loss of principal. No strategy assures success or protects against loss. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk. 

Alternative investments may not be suitable for all investors and should be considered as an investment for the risk capital portion of the investor’s portfolio. The strategies employed in the management of alternative investments may accelerate the velocity of potential losses.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may be suitable for you, consult the appropriate qualified professional prior to making a decision.