What should I do with my savings given that all the interest rates have dropped?

Hi Anon, I think there needs to be some fundamental understanding to the idea of holding cash.

All you've listed are not perfect and direct alternatives to a savings account. They come with risk and are usually less liquid.

If you need to hold cash, you hold cash. If you don't need to hold cash, it should be invested.

So this needs to come back to how you're allocating resources. I don't want people to move out of cash because rates have dropped in search of a higher return but forgetting the fundamentals of cash.

You're not supposed to make money from it. We've been spoiled over the last 5 years or so with High Yield Savings Accounts that many confuse them as alternatives to investment because "can make money". No, it has never been that way and it'll never be that way. But cash has it's place in everyone's portfolio.

So now, how much cash should anyone hold?

I have 3 pots.

1) Day to day spending (I cap this at 1 month income for liquidity)

2) Emergency Fund (6 months, 12 months, 24 months, up to you and at whatever stage in life you're at)

3) Money needed within 3 years (big ticket purchases that will happen and you can't risk that money).

Anything above that should be invested according to your risk profile, AT ALL TIMES. So this will then be a combination of the above options like equities, fixed income, commodities, social security, property).

So now, people are waking up realising "hey I have too much cash".

But please don't move cash away if it's needed for the above 3 reasons, but move cash away if it is above and beyond those 3 reasons.

A caveat would be people who want to save for a warchest althought I reject that idea. But if that's the case then that'll be pot 4.

So figure out how much you should hold. Next, figure out your investment strategy and asset allocation for your risk profile/appetite. Then stick to it.