Keeping Cash Money Around

Americans are concerned about a market crash or impending recession, according to a new Allianz Life Quarterly Market Perceptions Study — and 54% say they’re keeping more money than they should in cash because of recession concerns.


That could be costly. “While you might not feel like you’re losing money by holding it in cash, over the long term you will lose out,” says Kelly LaVigne, vice president of consumer insights at Allianz Life. “Money kept in cash or in low interest bearing accounts isn’t keeping up with the rising cost of living,” says LaVigne. 

Plus, with some savings accounts paying 5% or more — see some of the best-paying savings accounts here — there’s no reason to have cash sitting in a low-paying vehicle.

How much should you have in cash?
You certainly need some money in cash in case of an emergency, pros say, and this MarketWatch Picks guide details how much. “At least 6 to 12 months of an emergency fund is adequate,” says certified financial planner Joe Favorito at Landmark Wealth Management. 

You might need less if you’re in a stable industry and not worried about job loss, or a two-income household where you could live on one income; you might need more if you’re in a single-income household or in an industry plagued by layoffs.

While it’s generally a good idea to have a liquid emergency fund as well as some cash on hand for other expenses, you don’t want to have a stash of cash tucked underneath your mattress. Especially not when many savings accounts are paying higher rates than they have in 15 or so years.

“Rates are high enough that with a little shopping around, people can often get more than a 5% return in a simple money market account and still have all the liquidity they need,” says certified financial planner Bobbi Rebell, founder of Financial Wellness Strategies.  READ MORE...