Welcome to another edition of Advice for the Good Life.
Each week, these missives have a simple purpose: to help you live a little happier, healthier, wealthier, and wiser by offering perspective and practical ideas about the things that matter most.
Today, we begin with cash.
Yogi Berra once quipped that “a nickel ain’t worth a dime anymore.” With inflation elevated and short-term interest rates declining, investors holding excess cash face a double challenge: purchasing power is eroding while cash yields offer less compensation.
Cash provides liquidity, flexibility, and peace of mind. But beyond what your financial plan requires, too much can quietly become a drag on long-term wealth creation. Today’s Wealth Advisory explores the proper role of cash—and why putting excess reserves thoughtfully to work matters.
Then, Christine Despres, our Wellness Navigator, turns our attention to another asset deserving careful stewardship: the brain. She introduces a personalized brain and metabolic health intensive designed to help women better understand their cognitive risks and take meaningful action now.
That, in many ways, is what Advice for the Good Life is about: turning useful information into better decisions—and, ultimately, a better life.
If you find something worthwhile here, please enjoy it, subscribe if you haven’t already, and share it with someone who might benefit.
As always, thank you for your time, your interest, and the privilege of joining you each week.
Here’s to the good life—and becoming a little happier, healthier, wealthier, and wiser along the way.
Wealth Advisory: Understanding How Cash Fits Into Your Investment Portfolio
The baseball player Yogi Berra once said that “a nickel ain’t worth a dime anymore.” With inflation still elevated, many investors and consumers may be feeling this way as well. Not only are everyday costs higher due to energy prices, but short-term interest rates have fallen over the past two years.
For investors holding a significant portion of their portfolios in cash, this environment presents a dual challenge: rising prices reduce purchasing power while declining cash yields offer less income to compensate. With money market fund assets near record highs at $7.9 trillion, it is likely that many investors carry cash allocations that exceed what their financial plans actually require.1 What do investors need to understand about the role of cash in their portfolios today?
Managing cash requires careful planning
Cash serves many purposes across portfolios, financial plans, and everyday life, making it a nuanced topic. Holding too much of it, however, carries real long-term costs that are easy to overlook. Because cash feels safe, particularly when compared to the daily volatility of the stock market, its quiet drag on wealth accumulation can go unnoticed. Unlike stocks, bonds, and other assets, the value of cash does not compound meaningfully over time.
From an investing and financial planning perspective, the term “cash” is often shorthand for any liquid, short-term holding or vehicle. Common examples include savings accounts, money market funds, certificates of deposit (CDs), and similar instruments. These serve important purposes such as covering near-term expenses, maintaining an emergency fund, saving for a home down payment, or setting aside funds for tuition payments. Each of these represents a legitimate and necessary use of cash within a broader financial plan.
The key question is not whether to hold cash, but rather how much is appropriate given an individual’s goals, time horizon, and overall portfolio. Excess cash is sometimes described as “cash on the sidelines” because it sits idle rather than growing, paying dividends, or receiving bond coupons.
As the accompanying chart illustrates, money market fund assets remain at record levels following the climb in interest rates a few years ago. Higher short-term interest rates can appear attractive, especially during periods of stock market volatility. However, because these rates are short-term in nature, they are not locked in, which creates what investors often refer to as “reinvestment risk.” In order to keep pace with inflation and support long-term financial goals, this cash needs to be directed into asset classes with the right characteristics.
This is especially relevant today, given that short-term rates have already declined. Investors who shifted into cash have not only experienced lower yields but have most likely missed a significant portion of the broader market rally that took place over the past few years.
Inflation quietly erodes the value of cash
A common misconception about cash is that it is truly risk-free. While the nominal balance shown on a bank statement does not fluctuate the way stock prices do, the true value of cash can still decline. This is because the value of cash is ultimately determined by what it can purchase, and inflation steadily erodes that purchasing power over time. The effect may appear modest in any given year, but it compounds across years and decades unless interest payments or asset appreciation offset it.
As the chart above shows, the inflation-adjusted return on cash, measured using current CD rates according to the FDIC, has been negative for most of the past two decades.2 In other words, even when cash appeared to be generating some income, inflation was outpacing it. With headline inflation currently at 4.2% and the one-month Treasury yield at 3.7%, real cash yields remain negative today by many measures.3
Money market funds, savings accounts, and short-term CDs must be rolled over regularly as they mature. This reinvestment risk requires ongoing management and is subject to shifting market and economic conditions. As a result, many of the same forces that influence stocks and bonds also shape the yields available on cash instruments.
Stocks and bonds support long-term growth
Stocks and bonds have traditionally served as the foundations of investment portfolios because they can generate both long-term growth and income. Dividend-paying stocks, for instance, offer income alongside the potential for capital appreciation. While dividends are not guaranteed in the way bond coupons are, certain sectors of the S&P 500, such as Real Estate, Energy, and Utilities, currently offer yields above 3%, which is comparable to many shorter-term cash and bond instruments.
Extending the maturity on bonds can also result in more attractive interest rates. For instance, the 2-year Treasury yield is currently around 4.2%, representing both a meaningful increase over short-term cash yields and a level that matches the latest inflation readings. Investment grade corporate bonds currently yield 5.3% on average, compared to a historical level of 3.9%. The Bloomberg U.S. Aggregate Bond Index yields 4.8%, more than one and a half times its average since 2009. Unlike cash, bonds can also appreciate in value, particularly in ways that help balance the broader portfolio.
Ultimately, history shows that a portfolio with the right mix of asset classes can not only outpace inflation over time but can also compound in ways that support long-term financial goals. This is not an argument against holding cash, but rather a reminder that the purpose of cash in a portfolio is to meet specific, near-term needs. For investors who have accumulated excess cash over the past few years, putting it to work thoughtfully is an important consideration.
The bottom line? Cash plays an important role in financial planning, but holding too much comes with long-term trade-offs. Staying invested in a diversified portfolio of stocks and bonds remains the best way to work toward long-term financial goals.
References
- https://www.ici.org/research/stats/mmf
- https://www.fdic.gov/national-rates-and-rate-caps
- https://home.treasury.gov/policy-issues/financing-the-government/interest-rate-statistics
Wellness Navigator and Holistic Brain Health Coach, Christine Despres, RN, NBC-HWC, CDP
Your Brain Deserves VIP Treatment. Here’s What That Looks Like.
I’ve been quietly building something for a while now, and it’s finally ready.
Before I open this up publicly, I wanted my wellness community to hear about it first.
It’s called Know Your Cognitive Risk, Change Your Story. It’s a five-hour personalized brain and metabolic health intensive and it is unlike anything else I offer.
Here’s who it’s for. The busy woman who is listening to the signals. The one who notices when something feels off and takes it seriously. Who has done her share of research, has tried things that haven’t worked and is tired of trying to figure it out alone. Who wants real answers from someone who understands both the science and what it looks like in real life. Not a magic supplement. Not a quick fix. Not a generic wellness plan. A clear path forward built entirely around her.
Right now you might be managing the fog, pushing through the fatigue, while the forgetfulness and the family history quietly sit in the back of your mind. After our time together you will have a clear picture of what is driving your symptoms, what your brain actually needs and a personalized plan to start acting on it now. Not someday. Not after more research. Now. That is the transformation this day is built around.
Here’s what we do.
Before we meet, you complete a detailed health history and three-day food journal. I review everything in advance so we arrive ready to go deep. Then we spend five hours together working through the full clinical picture of your brain and body, assessing where you are across the four domains the research tells us matter most for cognitive protection and building a plan that is specific to you.
You walk away with a written Personalized Brain Health Blueprint. Not a worksheet. Not a handout. A personalized, clinically-informed roadmap for your brain, your metabolism and your life. Plus a follow-up call two weeks out to check in, troubleshoot, celebrate and keep the momentum going.
The investment is $997. Spots are limited because of how much goes into each one.
Here’s something worth sitting with. Up to 50% of cognitive decline is preventable. Not with medication. Not with genetics. With lifestyle. What you eat, how you move, how you sleep, how you manage your numbers. The window to act is now. Don’t let those quiet voices in the back of your mind wear you down. Be proactive. Take control of your health and how well you age.
If any part of this is speaking to you, the next step is a brief discovery call. No pressure, no pitch. Just a conversation to make sure this is the right fit for where you are right now.
You can book that call here: christinedespres.as.me.
Your brain deserves this level of attention. I’d love to be the one who helps you give it.
Warm regards,
Christine
The Wellness Navigator | Brain & Metabolic Health Coach | RN, NBC-HWC, CDP