Is it a good idea to hold onto cash?

Inflation will deteriorate the value of your savings if you choose to keep your cash in a bank account. In the long term, you'd better invest now, even if the expected returns are lower than they have been historically. In general, having an emergency fund is good. However, having too much cash can slow down the growth of your overall wealth.

Any money you plan to allocate to a short-term goal, which will take place over the next one or two years, is best kept in cash, says Benz. Since there is no chance of the value decreasing, “cash is the best option, even if inflation is a risk factor,” he says.