Is cash risky? The answer might surprise you

Last week in an email to clients, I shared about the risks of holding cash for long-term goals, and it sparked some good conversations. Cash can feel secure because it doesn’t have market volatility, but its purchasing power can decline over time as the cost of goods and services rise. In contrast, a growth-focused investment portfolio will have ups and downs, but it’s designed to grow over time. Below is a case I simulated in my planning software. The only difference is one portfolio is invested in all cash, the other a mix of 80% stocks, the rest short-term bonds and cash. In this example the cash portfolio runs out before the plan ends, while the growth-focused portfolio remains funded throughout the whole plan - resulting in a potential difference of over $2 million.