Holding Cash: Understanding the Pros and Cons

Stephen Weitzel and Joe Perdue discuss our perspective on the pros and cons of going to cash in the current favorable yield environment.

In recent months, we've had many conversations with clients—especially retirees—about whether now is the time to shift a larger portion of their portfolios into cash or cash alternatives like HYSAs and CDs. With interest rates at their highest levels in 15 years, the temptation is understandable. But is going all-in on cash really the safest move?

The Allure of Cash in a High-Rate Environment

Money market accounts and CDs are offering returns not seen since before the 2008 financial crisis. For many investors, especially those uneasy about recent market volatility, locking in a fixed interest rate seems like an appealing way to remove uncertainty.

However, moving entirely to cash can carry its own risks. Chief among them is loss of purchasing power due to inflation. While cash might feel safe in the short term, over time it can erode your ability to meet future financial goals.

Why a Rules-Based Approach Works

At Reveille Wealth Management, we use a rules-based investment discipline that blends risk management with growth opportunities. That generally means keeping a portion of client assets in high-yielding cash alternatives, while maintaining investments in market sectors showing an uptrend.

This approach allows us to benefit from current interest rates without abandoning the potential for higher long-term returns from stocks and bonds.

Understanding the Yield Curve

Today, short-term interest rates are higher than long-term rates—a phenomenon known as an inverted yield curve. This typically signals that rates may fall in the future. If you lock into a high-yield CD now, you could find yourself reinvesting at much lower rates when it matures, potentially missing out on market gains that accompany falling rates.

Staying the Course Through Uncertainty

There will always be market "going concerns"— events that create anxiety and doubt for investors. Whether it's a Fed meeting, a geopolitical event, or an economic report, these moments can tempt investors to act on emotion.

As financial advisors, our job is to help you resist those impulses, trust the process, and make decisions aligned with your long-term goals. When preservation is needed, we typically shift to cash. When opportunities arise, we look to keep you invested—even when it feels uncomfortable.

Help Protect Your Savings During Instability

If you're feeling anxious about market conditions, it's a good time to revisit your financial plan. Ensure your portfolio is structured to achieve the returns you need without taking unnecessary risks. Sometimes that means making modest adjustments—not wholesale changes.

Contact Reveille or reach out to one of our team members directly to learn more about how we help our clients through these volatile markets. Let's make sure the decisions you make today keep you on track for tomorrow.

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Material prepared partially by Arm Communicators, LLC, and independent third-party.

The information provided is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Every investor’s situation is unique and you should consider your investment goals, risk tolerance, and time horizon before making any investment.

Any opinions are those of Reveille Wealth Management and not necessarily those of Raymond James. Expressions of opinions are as of this date and are subject to change without notice. Raymond James and its advisors do no offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation. Prior to making an investment decision, please consult with your financial advisor about your individual situation.