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Having Your Savings In Cash Isn’t A Plan

Wednesday, January 8, 2014 - 3:31 PM
Scott Burns response to an individual having 100% of their savings in
cash might also be of use to one 100% invested in low paying CDs:

     "Being in cash for five years means you've paid a very high
      price for fear and indecision."

Read more:
cumuluscumulus358 posts since
Jan 16, 2010
Rep Points: 1,675
1. Wednesday, January 8, 2014 - 4:21 PM
As long as the "cash" is bringing in extra money to pay your bills why is it the wrong decision? The only thing I ever lost money in was that so called great Fidelity Mutual Fund.  After it wiped out $3,000.00 of what I had made, I decided not to wait around to lose more so I cashed out and put it in a nice "safe" CD which could bring me in some reliable income.  For me this has nothing to do with "fear and indecision".  It's what I prefer to do to bring in a continue flow of extra cash which I can depend upon.  Maybe the people risking their money in stocks are doing it because they have the "fear" of not making more money than they can in CDs so they live in "fear" hoping they have made the right stock choices.  Whatever rows your boat are the best oars for you.
paoli2paoli21,401 posts since
Aug 10, 2011
Rep Points: 6,135
2. Wednesday, January 8, 2014 - 5:21 PM
“I have $436,900 in cash in my TD Ameritrade retirement account.”

That cash account pays an extraordinary interest rate of .01% at the present time. I agree, that’s “not a plan”. If the individual had been reading, and acting upon, the recommendations noted in Ken’s over the last five years he would have been much further along in his total return.
ShorebreakShorebreak2,675 posts since
Apr 6, 2010
Rep Points: 14,527
3. Wednesday, January 8, 2014 - 5:36 PM
Why would anyone leave that much money in a retirement account at .01%?  Doesn't Ameritrade allow people to purchase CDs and put them in the account.  I'm with two brokerages but I have over the years purchased the highest paying CDs for the accounts.  I would never leave a large amount of money sitting lazily doing nothing at .01%.  I think I have done very well for us over the many years with  both of our brokerages. 
paoli2paoli21,401 posts since
Aug 10, 2011
Rep Points: 6,135
4. Thursday, January 9, 2014 - 7:11 AM
Having 100% of your savings in cash is not a bad plan as long as you are having that money work for you and earning the best interest possible. It is a conservative approach and won’t make you rich but at least you are guaranteed a positive return with no risk.  Having $400K in cash earning .01%; now that’s a bad plan earning less than $50 per year. Earning 2% that same $400K would be earning over 8k per year.
FARFAR108 posts since
Feb 26, 2013
Rep Points: 386
5. Thursday, January 9, 2014 - 7:29 AM
I think that the reasons of her having so much cash at 0.01% are (1) fear to invest elsewhere, (2) reluctance to spend time for some financial education as well as pursuing higher-interest products (e.g., CDs, reward checking accounts).    
51hh51hh1,476 posts since
Jan 16, 2010
Rep Points: 6,427