Should You “Bank On It”?

Surrounded by economic and political uncertainty, many people may find themselves questioning whether to pull back a bit from what might feel to be increasingly disconnected financial markets.   “Who can criticize me for being conservative?”, some may wonder aloud.   As there was a temptation in March when the markets dropped precipitously due to fears regarding the pandemic, you may be facing yet another temptation.

Given today’s rate environment, moving money into an interest-bearing account at a bank may be more painful than you realize.   With many banks paying only .01%, even some online banks who used high crediting rates to attract deposits may find themselves only paying .50% on deposits now.   Ugh!

Here are two thoughts as to why you may want to think twice about going to cash.

  • Attempting to time the market is extremely difficult and seldom is in the investor’s best interest.   Think about it.   You need to be “right” twice, both in choosing when to exit the financial markets as well as when to get back in.   Most investors would be deeply regretful had they exited the markets in early April and sat on the sideline in cash.   If your long-term goals and objectives have not changed, you should stay the course with a well-structured and appropriate portfolio.
  • If the historical average of the annual inflation rate from 1920 through 2019 is 2.73%, a savings account yield of .50% will assure a loss of economic purchasing power.   With the Fed now being more open to allowing inflation to creep into the economy, the loss of economic purchasing power on funds in cash may only be exacerbated.

If you are still tempted to “go to cash”, reach out and ask for a meeting with your financial advisor.   If you’d like to discuss with us, please don’t hesitate to give my team a call.

This material is intended for informational purposes only and should not be construed as legal or tax advice and is not intended to replace the advice of a qualified attorney, tax advisor or plan provider.

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Tom McCartney is the Founding Principal of My Advisor & Planner and a Registered Representative and Investment Advisory Representative with M Securities. Securities and Investment Advisory Services Offered Through M Holdings Securities, Inc., a Registered Broker/Dealer and Investment Adviser, Member FINRA/SIPC. My Advisor & Planner is independently owned and operated.

Tom and his team can be reached at, at 630-457-4068, or you can visit them at