4 ms·

How is holding large amounts of cash bad? I don't understand, could you elaborate on that?

• varjag 10y ago
  You are losing them to inflation.
  • forgetsusername 10y ago
    At a very slow rate, at very low risk. There are always tradeoffs. I think bad about cash.
    • varjag 10y ago
      There's enough of compound effect to make your cash worth a lot less by the time you retire. E.g. here in Norway you'd lose 50% value of your savings over 20 year period.
      • forgetsusername 10y ago
        If you stuff the cash in a mattress and sit around for 20 years. But if you do that, inflation isn't your biggest risk.
• eterm 10y ago
  Cash doesn't grow and is generally devalued through inflation. A diverse portfolio is better protected against inflation, cash ought to make up some of a diverse portfolio but not a large proportion of it. Bonds are a better way of having cash-denominated assets since they still have returns while not being particularly risky (in the general case). Cash is still useful however because it is easy to access quickly without losing value to having to sell quickly and doesn't incur fees.