When interest rates peaked in March 2008, investors looked to cash as an attractive alternative to the battered share and listed property markets.

Since then, cash rates have fallen rapidly, and anyone reliant on interest has seen their income fall accordingly. Superannuation fund members who have switched to cash may be setting themselves up for under-performance in the future.

Financial Adviser, Anthony Newton of Genesys Wealth Advisers, says there may also be more serious consequences. "People need to realise that, after taking account of fees and inflation, cash may actually be producing a negative return." Even so, some investors are finding the safety of cash more attractive than the turbulence of equity markets. In the US, people are lining up to buy government bonds that return less than 0.25% interest.

In Australia, many people are moving their superannuation funds into cash and other conservative options. "With the Reserve Bank dropping the cash rate target to 3.25% in February, these investments don't look so attractive", says Newton. "At times like this, shares and property produce higher levels of income than cash and fixed interest. They may still fluctuate in value but the long-term outlook is good."

"This isn't a signal to switch all your superannuation back into shares. Rather, investors should establish a sound strategy in line with their risk profile, and stick to it. Portfolios need to be well diversified, and the risks associated with moving from cash to shares can be reduced by using dollar cost averaging."

Newton also warns investors to keep their eye on the long-term. "Making frequent changes to an investment portfolio often reduces performance, it may result in additional fees, and it is impossible to time the turning points of markets."

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