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How Much Are You Losing in Idle Cash?

How Much Are You Losing in Idle Cash?

February 17, 2023

It can feel gratifying to log in to your bank accounts and see a large amount of liquid cash available at the ready for whatever you wish. However, even though this sizable sum may give you a sense of security, it’s important to remember that leaving your money idle may expose it to risk. Inflation can erode your purchasing power, resulting in missed opportunities for growth if you don’t invest your money wisely. Placing cash in a diversified portfolio of stocks, bonds, and other investments can help safeguard your assets by allowing you to take advantage of market fluctuations and generate higher returns than leaving your money idle.

By leaving too much liquid cash in your bank accounts, you may be missing out on the chance to maximize the value it has. Conversely, if you take that idle cash and strategically utilize it, you can increase the potential for greater returns on your overall financial plan.

Origins of Idle Cash

Idle cash can build up in a variety of ways. Young professionals earning more money than they are used to can let cash pile up in their savings because they don’t know how to make it work for them. Experienced investors may not even realize they have idle cash sitting around from dividend payouts that aren’t automatically reinvested. Cash from passive revenue streams, such as rental properties, may not be integrated into your investment portfolio and could be actively dragging down your return potential.

Regardless of where the cash is coming from, having too much of it idle in your portfolio is not a wise financial strategy. There is no right number, and it’s different for every person and family, but we believe one should have a cash contingency target to keep in reserves based on your unique circumstance. Other than this backup cash, the amount of idle money in your portfolio should be limited, with additional funds being productively put to work.

Stay on Top of Your Accounts

Do you know how much idle cash you’re carrying? You may consider the money you put into mutual funds as being invested, but did you know that these funds usually keep about 5% of the portfolio in cash and cash equivalents? Evaluate your portfolio as soon as possible, because the excess cash sitting in your savings is likely losing the fight against inflation.

Inflation has increased costs, and the value and purchasing power of $100 today is very different from that of 30 years ago. Even with rising interest rates, idle cash is still not earning nearly enough to effectively combat inflation, and holding on to excess cash for the long term is effectively minimizing the potential upside of your hard work. What can you do with the extra cash? How do you reinvest it so you maximize its return?

A Better Alternative

At Center for Wealth Management, we strive to find the best way to put your money to work and align your investments with your current needs and future goals. Whether you are saving for your child’s education, strengthening your retirement accounts, or wanting to purchase a new home, we want to see your investments reach their potential.

It’s important to understand that there are more efficient ways to handle cash than simply stockpiling it in a checking or savings account. If you need liquidity but still want to put your cash to work, consider investing in short-term securities. These types of investments can be liquidated in less than a year but earn better returns than money collecting dust in your savings account.

Municipal bonds, real estate, and savings bonds are all excellent long-term investment options if you’re in a position to limit access to your funds for an extended period of time. These types of investments require commitment but can be lucrative if held until maturity.

Let Us Put Your Cash to Work

If you’re wondering whether your portfolio is too heavy on cash, we are here to help. At Center for Wealth Management, we can show youthe potential returns you may be missing out on while assessing your portfolio allocations. Our team’s expertise and guidance can assist you in determining which investment strategy can help leverage the most profits from your cash.

If you’re ready to review your investments and come up with a strategy that supports your unique goals, reach out to us by calling (248) 220-4321 or email You can also schedule a meeting by visiting

About Rob

Robert Moore is senior partner, financial planner, investment advisor, and co-owner of Center for Wealth Management, an independent, fee-based wealth management company based in Troy, MI. With more than 15 years of experience, Rob provides customized advice and solutions that are in the clients’ best interest. He strives to always go above and beyond his clients’ expectations, helping them retire with more security than they had before, and invest their time and energy in what’s most important to them. Rob specializes in working with DTE Energy employees, helping them maximize their benefits so they can reduce taxes, prepare for retirement, and protect their families through a comprehensive planning process. Rob graduated from Michigan State University and holds the CERTIFIED FINANCIAL PLANNER™ and Chartered Financial Consultant® (ChFC®) certifications.

Rob is known as a diehard family man who enjoys spending time with his beautiful wife, Jill, his daughter, Brookelyn, and his son, Brayden. When he’s not working, you can find him playing basketball once a week, squeezing in a round of golf, and watching college football and basketball with friends and family. He is passionate about enriching the lives of others through his church involvement and service at a community addiction program. Learn more about Rob by connecting with him on LinkedIn