07/16/2026
Cash feels safe. But holding too much of it comes with a cost that's easy to overlook.
Money market fund assets are near record highs, $7.9 trillion industry-wide, suggesting many investors are holding more cash than their financial plans actually require. With short-term interest rates declining and everyday prices remaining elevated, the return on that cash is falling at the same time its purchasing power is eroding.
The inflation-adjusted return on cash, measured using current CD rates, has been negative for most of the past two decades. Even when cash appears to earn interest, inflation has often outpaced it.
This isn't an argument against holding cash. Cash serves real, near-term purposes: emergency funds, upcoming expenses, short-term goals. The question worth asking is how much cash makes sense given your goals, time horizon, and overall portfolio, not whether to hold it at all.
Stocks and bonds remain the foundation for long-term growth. Certain dividend-paying sectors and longer-duration bonds currently offer yields comparable to short-term cash instruments, with the added potential for price appreciation that cash doesn't provide.
A diversified, long-term approach remains the most reliable way to stay ahead of inflation and work toward your financial goals.
More about it here: https://www.tidewaterwealth.com/blog/a-new-opportunity-to-build-tax-free-wealth-for-the-next-generation
