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Cash Is the Worst Investment?

Byadmin

I watch a guy on YouTube, Ben Felix, who talks about investments.

Ben is very research-focused, and each of his videos delves into some long-term study on investing that has some exciting results. Much of that still goes over my head, and I wish someone Explained It Like I Am Five.

His latest video shows that cash is one of the worst-performing investments in the long term.

This hits me hard. You know how I’ve been struggling to push cash into the market as the stock market continues to hit new highs?

While cash is the safest in the short-term, if you plan to hold cash for 10- or 20-years or more, you’re losing money to inflation more than half the time.

Remember when interest rates were 0.25% and inflation was 2%? People holding cash (short-term government bonds) were losing during that period.

This makes me want to sell my cash and put the money into a stock index. I have an overwhelming urge to do that.

It seems that I still have the same problem as always. No matter if I think I am moving a lot of money into stocks, it only ends up being 2-3% in any category.

Yesterday, my investment mix was:

  • Index Funds – 36% (goal 35%)
  • Individual Stocks – 3% (goal 5%)
  • High Div ETFs – 12% (goal 30%)
  • Bond ETFs – 4% (goal 15%)
  • Cash/Money Markets – 45% (goal 15%)

And today it is:

  • Index Funds – 39% (goal 50%)
  • Individual Stocks – 3% (goal 5%)
  • High Div ETFs – 15% (goal 25%)
  • Bond ETFs – 5% (goal 10%)
  • Cash/Money Markets – 37% (goal 15%)

Cash is coming down a bit. That’s good. And my percentage in index funds exceeds my percentage in cash for the first time in years.

I also adjusted my goals to increase the bias towards index funds and take back a bit from bonds and high-dividend ETFs.

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