❮ Return to Blog

Why Trillions Could Pour Into the Market This Year

Why Trillions Could Pour Into the Market This Year

Estimated reading time: 3 minutes

Money Migration

Investors are bracing for a year with a lot of change on the docket. One thing potentially making markets more interesting are the trillions of dollars that could get reallocated from short-term investments to other parts of the markets.

In the wake of the Federal Reserve’s interest rate hikes, investors embraced short-term investments, including money-market funds, to park their money, taking advantage of relatively easy accessibility and high interest rates pushing up returns.

But as inflation continues to moderate, the Fed has signaled rate cuts may be coming this year, and with it potentially lower returns for previously attractive investments.

Portfolio Adjustments

Nearly $9 trillion were sitting in money market funds and certificates of deposit as of Q3 2023. But at least some of that money could be headed for a new home this year as the interest rate environment changes.

Even though rate cuts are not set in stone, the Fed is currently projecting the federal funds rate to fall to 2.9% by the end of 2026, compared to its current range of 5.25%-5.5%.

Of course investors will still have reason to put their money in short-term investing instruments if interest rates are lower, and different investors have different needs. But even if only a portion of the multi trillion dollar pile would get reallocated it would still be a big deal.

State of Stocks

On the flip side, the stock market is hovering near all-time highs, leaving investors wondering if it can continue to go up. Markets have also largely priced in the ideal scenario of a soft landing, in which inflation moderates on the back of tight Fed policy but the labor market and broader economy remain strong.

At the same time, stocks have historically provided the greatest long-term returns for investors, and the prospect of lower returns on cash and cash-like investments may provide a compelling reason to pivot.

SoFi Securities (Hong Kong) Limited and its affiliates (SoFi HK) may post or share information and materials from time to time. They should not be regarded as an offer, solicitation, invitation, investment advice, recommendation to buy, sell or otherwise deal with any investment instrument or product in any jurisdictions. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
SoFi HK does not make any warranties about the completeness, reliability and accuracy of this information and will not be liable for any losses and/or damages in connection with the use of this information.
The information and materials may contain hyperlinks to other websites, we are not responsible for the content of any linked sites. The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi HK. These links are provided for informational purposes and should not be viewed as an endorsement. The risk involved in using such hyperlinks shall be borne by the visitor and subject to any Terms of Use applicable to such access and use.
Any product, logos, brands, and other trademarks or images featured are the property of their respective trademark holders. These trademark holders are not affiliated with SoFi HK or its Affiliates. These trademark holders do not sponsor or endorse SoFi HK or any of its articles.
Without prior written approval of SoFi HK, the information/materials shall not be amended, duplicated, photocopied, transmitted, circulated, distributed or published in any manner, or be used for commercial or public purposes.


About SoFi Hong Kong

About SoFi Hong Kong

SoFi – Invest. Simple.


SoFi Hong Kong is the All-in-One Super App with stock trading, robo advisor and social features. Trade over 15,000 US and Hong Kong stocks in our SoFi App now.