Cash is a terrible long-term investment, even at 5% interest

With a 5% return on cash, why would anyone want to invest in stocks? I know that cash feels good because its nominal value is stable - it feels safe, but it is counterintuitively extremely risky for long-term investors.

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[davidk]

I’ve always appreciated the plain Jane format of these videos. No explosions in the thumbnail or meme cuts (I’m takin to you Stephan graham). Just straight researched advice for grown ass adults. Thanks for the continued uploads over the years.

[alphamale]

Cash is still preferable to panic selling stocks at the bottom of a bear market.

[dominikthibault]

as always, this is a great rational reminder for every DIY investor. This is by far the best financial channel I know

[victoriaabott]

I feel investors should be focusing on under-the-radar stocks, and considering the current rollercoaster nature of the stock market, Because 35% of my $270k portfolio comprises of plummeting stocks which were once revered and i don't know where to go here out of devastation.

[JeredtheShy]

It's a good time to make sure your emergency fund is big enough, with a nice bonus from the interest rate to encourage you. But that money is going to sit there because it's an investment in your short term daily security, and that is its return. If you have the emergency fund you need, then listen to the man.

[sprintmiles]

Very important video. Not simply because it illustrates the drawback of holding long-term assets in cash, but because it wonderfully assuages concerns over short-term moves in borrowing rates for long term holders, i.e., higher expected returns offset present value declines in asset values for long-term investors.

[DentalTech]

Excellent advice, as usual. I'm 70 years of age, though, so in my case cash is not a long-term investment anymore. I'm 45% in stocks.

[Zilero]

Very timely advice, thanks Ben. I just had a family member ask about this, so I’ve been wondering about the data.

[DeepDiveDiscovering]

Another great video Ben! Doing your followers a great service.

Thanks big shooter

[BillyCarsley]

I was given $250 in savings bonds for my 10th birthday. When I cashed them at 30 year maturity, they were worth less than they were initially due to inflation.

[angelocesar]

From Brazil, I watch all videos. Thanks Ben.

[michaelhoward]

the chuckle at the end made me laugh... good video as always.

[montyburnz]

This video is completely aimed at me. Thanks for the insight.

[doneiliragaba]

Man It is very kind from you to Provide this free on YouTube, will be forever be Grateful, Financially you’re inspiring.

[Woj_Poznanski]

I like the Rational Reminder podcast and I love your solo videos. Great job as always.

[dumbcat]

it depends on how old you are. if you are in the final 15 or 20 years of life you might not be able to afford a big drawn down and the stress of a big draw down. you might prefer to lose a little money holding something relatively safe even if it cannot keep pace with inflation

[bernhardklinger]

What a wonderful video, thank you very much!

[redoxhydra]

Just the question I was wondering. Thanks Ben!

[Skilliard]

How does the inverted yield curve play into this, though? Historically, bonds usually pay more than cash due to the interest rate/duration risk premium, but currently this is not the case. We can get 5.5% on cash, but 10 year and 30 year US treasuries only pay about 4.2%. So for bonds to outperform, short term interest rates would need to drop and average below 4.2% over the next 10-30 years.

[Immabeast]

Thank you for the video Ben! I have been thinking about this exact topic over the last few months wondering if my investing was still the best option.