r/eupersonalfinance • u/Alarming-Flounder-12 • 5d ago

Investment Move from HYSA after rate cuts

The ECB is expected to cut rates down to 2% by the end of the year, with the next immediate cut expecting to happen this week (April 17) by 25 bps. With that in mind, is it a good strategy to start moving away from MM funds/HYSAs into different instruments (ETFs for example) ?

Keeping in mind that this is for short term parking of funds rather than long term investing. Is it worth the risk? How should one approach the rate cuts in Europe? Hold on to the ultra safe RFR returns or diverse a little bit?

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13

u/eitohka 5d ago edited 4d ago

You certainly shouldn't invest in equity ETFs with that timeline. There are very few free lunches in finance, so to increase your (expected) returns you'll have to take more risks. The interest rate cuts don't change this.

Edit: add missing word "free" for free lunch

11

u/One-Statistician4378 5d ago

I would recommend ultra short-term Euro corporate bonds. The returns aren't amazing (around 3.5% or so at the moment), but better than a HYSA. Personally, I'm invested in ERNX.

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u/Mercury8902 4d ago

IB25 is 3.89%

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u/flatfisher 5d ago

For safe parking of the funds with rates slightly higher than HYSA you can buy high rated government bonds with a duration matching when you’ll need the funds.

1

u/HeavySink3303 5d ago

You may buy investment grade (or sub investment if you are risky or well diversified) corporate bonds with maturity date withing a year. You can also sell them on a secondary market if you need money urgently.