Cash is king. The origin of this popular phrase is unknown, but most sources give credit to the CEO of Volvo who allegedly used the expression shortly after the global stock market crash of 1987. He used the phrase to suggest that companies with strong cash reserves were able to weather the recent storm better than others.

Cash was king during that time period, and similar to large publicly traded businesses,

retirement investors often build up cash reserves for protection as well.

Like Volvo in the late 80s, cash can help retirees weather unpredictable catastrophic storms.

However, with money markets, high yield savings accounts, and bank CDs currently paying

4 to 5% interest rates, many are now viewing cash as an investment. They're viewing cash as a way

to make money, not necessarily as a way to

protect their retirement plan against a prolonged downturn in the markets. Welcome to Stay

Wealthy podcast. I'm your host, Taylor Schulte, and today I'm sharing why cash is a bad investment,

even at today's interest rate levels. To grab the links and resources for

today's episode, just head over to you staywealthy.com forward slash 189. When evaluating

investment returns, there are many different metrics that we can use to measure the performance

or the outcome. The two that most investors

are typically concerned with or should be concerned with are nominal returns and real returns.

The nominal rate of return of an investment is the amount of money made before factoring in

things like taxes, fees, and inflation. For example, if you invested $100,000 into the

S&P 500 one year ago today, and your investment is now worth $110,000, well, your nominal rate of

return was 10%. Nominal returns are what most investors pay attention to when reviewing their portfolios.

And that's because by ignoring things like fees, taxes, and inflation, investors find it a little

bit easier to compare one investment against another.

Not all that different than comparing your gross salary to another person's gross salary.

Two people may have the same $100,000 gross salary

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