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There is risk in cash, it is called inflation, if you bought a car last year you lost 7% + depreciation of the car since you bought it. The SP500 is up 11% sinc
by iamricks 5y ago
There is risk in cash, it is called inflation, if you bought a car last year you lost 7% + depreciation of the car since you bought it. The SP500 is up 11% since last year.
This means you would have lost 7% to inflation, 11% to potential upside plus depreciation of your car. Assuming your car did not depreciate because of current car production shortages you lost 18% of your money buying cash vs 3%-4% interest on the loan.
Cash is not risk free
- b112 5y agoCash inflation has nothing to with a new product decreasing in value, due to wear, tear, and being used, after purchase.
- ryathal 5y agoyour investment lost 7% to inflation too. 7% of that 11% isn't gain. That puts you up 4% - interest rate * risk factor.
- frumper 5y agoTo add on to your comment, you're also going to be paying taxes on that 11%. That 4% is looking more like 1-2% for most people.