Should investors cash out their investments or hold steady?
March 23, 2025
Market jitters: Should you cash out or hold steady?
Should I cash out now? With Donald Trump back in power in the US and uncertainty looming over financial markets, it’s no surprise that many are feeling uneasy. The fear of potential losses is real, and the temptation to liquidate your investments to secure gains and shield yourself from potential future losses can be strong.
But before making any big moves, it’s important to take a step back and consider the long-term implications. History has shown that knee-jerk reactions to political and economic uncertainty can often do more harm than good — leading to missed opportunities and diminished returns.
The cost of cashing out
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Selling investments to lock in gains may seem like a prudent move, but it raises a critical question: What do you do with the funds afterwards?
Holding cash for too long means missing out on potential growth and income, particularly in an environment where inflation erodes purchasing power.
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Additionally, re-entering the market at the right time is notoriously difficult, often leading investors to buy back in at higher prices, negating any benefits of selling in the first place.
During Trump’s previous presidency (2017–2021), markets experienced sharp declines, such as during the US-China trade war or the COVID-19 crash, but they also rebounded strongly.
Investors who panicked and sold during downturns often struggled to reinvest at the right moment, while those who stayed invested saw significant gains over time. For example, I met an investor in late 2021 who was referred to me after making a series of investment missteps due to his fear of recession under the Trump Administration. When we sat down together and added it all up, prematurely exiting the market, sitting in cash too long, among other poor decisions, amounted to over $5 million in losses!
A smarter approach: Staying invested in high-quality global bonds
Rather than exiting the market entirely, a more strategic approach is to adjust your portfolio to focus on stability and income generation. Investors should turn to high-quality global bonds, which provide a strong foundation during uncertain times.
Why is this important?
1) Capital preservation – Unlike stocks, high-quality global bonds offer a lower-risk alternative, providing stability even in volatile times.
2) Steady income – Bonds generate consistent interest payments, helping investors maintain cash flow while keeping their capital invested.
3. Global diversification – Exposure to a diversified portfolio of global bonds reduces reliance on any single market or political environment, offering a more balanced approach to risk management.
The bottom line
Uncertain times often tempt investors to move to cash, but history shows that staying invested in the right assets is the key to long-term success. Rather than liquidating entirely, investors should focus on preserving and growing their wealth through high-quality, income-generating investments.
If you are unsure of the best way to position your portfolio in this environment, speak with a trusted financial advisor to explore options that align with your financial goals.
Toni-Ann Neita-Elliott, CFP, is the vice president, sales & marketing at Sterling Asset Management. Sterling provides financial advice and instruments in US dollars and other hard currencies to the corporate, individual and institutional investor. Visit our website at www.sterling.com.jm.
Feedback: If you wish to have Sterling address your investment questions in upcoming articles, e-mail us at: info@sterlingasset.net.jm.
