Cash Is Not Always Low Risk

Cash is often described as the safe option.

It does not fluctuate the way markets do.

It does not create alarming headlines, and it feels steady.

But stability is not the same as safety.

Cash carries a different type of risk.

It risks not keeping up with the rising cost of living.

Inflation works gradually, it rarely creates drama, but over time it reduces purchasing power.

Money that sits still can lose ground quietly.

As retirement approaches, spending typically becomes more immediate.

There may be less time to recover from poor decisions, less capacity to rebuild capital, less flexibility to delay income.

Holding too much in cash can feel protective.

Yet if that cash does not grow enough to support long-term spending, flexibility can shrink over time.

This risk is rarely obvious at first.

Cash plays an important role.

It supports:

The issue is not whether cash should exist in a portfolio.

It is whether the allocation reflects long-term spending needs.

Cash often feels comfortable.

But comfort alone is not the objective.

The objective is alignment, Alignment between:

When cash exceeds what is required for short-term stability, it can quietly increase long-term risk.

That is a subtle distinction.

But an important one.

Cash is Not Always King