The Hidden Cost of Sitting on Cash

Why waiting on the sidelines could be holding you back

In uncertain markets, sitting on cash can feel like a smart move. It offers flexibility. It cushions volatility. And it’s always there if you need it.

But there’s a hidden cost to staying out of the market — and it adds up over time.

Whether you're waiting for a better entry point, recovering from a past loss, or simply unsure what to do next, holding too much cash can work against your long-term goals. Why? Because while your cash stays flat, inflation doesn’t. It slowly eats away at purchasing power — and that quiet erosion can be more damaging than a short-term dip in the market.

Cash has a role — but it’s not a strategy

Cash is essential for short-term needs, emergencies, and upcoming purchases. But beyond that, large cash positions often mean missed opportunities for growth.

Historically, the stock market has rewarded long-term investors. Even after downturns, the market has recovered — often quickly — and continued its upward trajectory. Meanwhile, cash has delivered little more than peace of mind, especially in low-interest environments.

Let’s look at an example:
If you held $250,000 in cash for five years and inflation averaged 3%, your purchasing power would shrink by over $37,000. That’s money that could have been working for you — growing, compounding, and helping you move closer to your goals.

Fear is understandable. So is being proactive.

You don’t need to go all-in to make progress. Even modest shifts — guided by your risk tolerance, timeline, and goals — can have a meaningful impact.

An advisor can help you evaluate:

• How much cash you really need to keep on hand
• Where your excess cash could be put to better use
• How to move forward at a pace that feels right for you

Let’s review where your cash is sitting — and what it could be doing for you.