Cash Is Not a Strategy: Why Sitting on Money Is Costing You
by Malik Amine
Key Takeaways
- Holding excess cash beyond 6 months of expenses is costing you real purchasing power every year
- With inflation averaging 3.2% over the last 3 years, $100K in cash lost about $9,400 in real value
- High-yield savings accounts at 4.5% barely keep pace with inflation after taxes
- The biggest risk isn't losing money in the market. It's letting your money grow broke slowly.
- You don't need the perfect investment plan. You just need to stop doing nothing.
Why Are So Many Smart People Sitting on Cash?
I see this all the time. Founders who just had an exit. Physicians who finally started making attending money. Smart, successful people who are sitting on $200K, $500K, sometimes $1M+ in cash. And doing absolutely nothing with it.
I get it. Really, I do. You worked incredibly hard for that money. The idea of putting it somewhere and watching it go down, even temporarily, feels terrible. So you tell yourself you'll figure it out later. You'll invest when the market calms down. You'll do something when you have more time to research.
But here's what's actually happening. Your money is losing value every single day. Not in a dramatic, headline-grabbing way. Quietly. Slowly. Like a leak you can't see.
The Math on Doing Nothing
Let's talk numbers because this is where it gets real.
The Bureau of Labor Statistics reported that the Consumer Price Index increased 2.9% year-over-year as of January 2026. Over the last three years, inflation has averaged about 3.2% annually.
That means if you had $100,000 in a checking account three years ago, it can buy about $9,400 less in goods and services today. You didn't spend it. You didn't lose it. Inflation just ate it.
Now, you might say, "But I have a high-yield savings account paying 4.5%." Fair enough. But after federal and state taxes on that interest (let's say a combined 35% rate for a high earner), your after-tax return is about 2.9%. That's basically break-even with inflation. You're running on a treadmill.
Compare that to the S&P 500, which has returned an average of roughly 10% annually over the last 30 years, according to data from NYU Stern. Even after taxes, even after fees, the gap between invested money and cash is enormous over time.
Why Founders Are Especially Bad at This
Tech founders have a unique problem. They're used to putting all their money into their company. Their net worth was their equity. Their "investment" was their startup.
So when the exit happens and suddenly there's $2M or $5M in the bank, they freeze. They've never had to think about investing before. The company was the investment.
And here's the tricky part. A lot of founders are also naturally skeptical of traditional finance. They disrupted their industry, right? So why would they trust a traditional advisor or a traditional portfolio? They want to find the "optimal" solution, which means they research endlessly and do nothing.
I've sat across from founders who spent 18 months "researching" what to do with their exit proceeds. In those 18 months, a basic diversified portfolio would have earned them $150K to $300K. Instead, their cash earned them basically nothing after taxes and inflation.
The Physician Version of This Problem
Physicians do the same thing, just for different reasons. They finish residency, start making $300K to $500K, and they're paralyzed by all the competing advice. Pay off loans or invest? Buy a house? Max out retirement accounts? Open a practice?
So they park money in savings and tell themselves they'll figure it out once things settle down. But things never settle down. There's always another decision, another life change, another reason to wait.
A survey by Physician on FIRE and The White Coat Investor found that 31% of physicians in their first three years of attending salary had more than $200K in cash or cash equivalents beyond their emergency fund. That's money that should be working for them.
What "Having a Plan" Actually Means
Here's the thing people overcomplicate. Having an investment plan doesn't mean you need the perfect allocation, the best-performing funds, or a crystal ball about what the market will do.
It means three things.
One, keep 3 to 6 months of expenses in cash for emergencies. That's your safety net. Everything beyond that should be working for you.
Two, decide on a basic allocation that matches your timeline and risk tolerance. For most people in their 30s and 40s, that's something like 70-80% stocks, 20-30% bonds. Not exciting. Not fancy. But it works.
Three, automate it. Set up automatic transfers so you're not making emotional decisions every month. Take yourself out of the equation.
That's it. You can optimize from there over time. But the difference between a basic plan and no plan is worth way more than the difference between a basic plan and the "perfect" plan.
The Cost of Waiting for the Perfect Moment
People always want to wait for the right time to invest. After the election. After the Fed makes a decision. After the market dips.
But according to research from Charles Schwab, someone who invested $2,000 annually with the worst possible timing (buying at the market peak every year) still ended up with more money after 20 years than someone who kept everything in cash. Every single time.
The market goes up over time. Not every day, not every year, but over any meaningful time horizon, it goes up. And every day you wait, you're missing out on that growth.
I like to say your money is growing broke slowly. It's not going to zero. It's just worth a little less every day. And those little losses compound just like returns do, except in the wrong direction.
What to Do This Week
If you're sitting on excess cash right now, here's what I'd do.
Calculate your emergency fund need. 3 to 6 months of actual expenses. Set that aside.
Everything else? Open a brokerage account if you don't have one. Pick a target-date fund or a simple three-fund portfolio (total US stock, international stock, bonds). Transfer the money. Done.
You don't need to do it all at once. Dollar-cost average over 3 to 6 months if that makes you more comfortable. The point is to start.
Because the perfect plan you execute beats the ideal plan you never get around to. Every time.
Summary
Sitting on excess cash feels safe, but it's quietly costing you thousands in lost purchasing power every year. Whether you're a founder post-exit, a physician starting your attending career, or anyone else with savings beyond your emergency fund, the math is clear: invested money dramatically outperforms cash over time. You don't need the perfect strategy. You just need to stop waiting and start. The best time to invest was yesterday. The second best time is today.