Cash is the most insecure asset, warns Ryan McCarty, CFP from McCarty Money Matters. He suggests keeping cash to a minimum at home due to fire or theft risks. While cash can be useful for budgeting and emergencies, it does not earn interest and loses value over time due to inflation. Deciding to hold cash should depend on individual financial goals and circumstances.
Is it Smart to Have Cash?
As we continue to navigate through uncertain times, many people are wondering whether it’s smart to have cash on hand. While some argue that cash provides a sense of security and flexibility, others believe that it’s a risky asset to hold onto. In this article, we’ll explore the pros and cons of having cash and provide insights from financial experts.
The Most Insecure Asset
From a security point of view, cash is the most insecure asset you can have. Keeping large amounts of cash in your house can make you vulnerable to theft and fire. That’s why Ryan McCarty, CFP from McCarty Money Matters, recommends keeping cash to a minimum in the house. « Just how minimum is up for debate among financial experts, » he says.
The Pros of Having Cash
Despite its risks, having cash can provide some benefits. For one, it can be a useful tool for budgeting and controlling your spending. When you have cash on hand, you’re more likely to think twice before making a purchase. Additionally, cash can be a valuable resource during emergencies when other forms of payment may not be accepted.
The Cons of Having Cash
On the other hand, there are several downsides to having cash. For starters, cash doesn’t earn interest, which means that it loses value over time due to inflation. Moreover, holding onto large amounts of cash can make you a target for theft and fraud. Lastly, cash can be a hassle to manage and keep track of, especially if you have a lot of it.
The Bottom Line
So, is it smart to have cash? The answer depends on your individual circumstances and financial goals. If you’re someone who values flexibility and likes to have cash on hand for emergencies, then keeping a small amount of cash in a safe place may be a good idea. However, if you’re looking to grow your wealth and earn a return on your investment, then keeping cash in a savings account or investing in other assets may be a better option.
In conclusion, while cash can provide a sense of security and flexibility, it’s important to weigh the risks and benefits before deciding how much cash to keep on hand. From a security point of view, keeping cash to a minimum in the house is a good rule of thumb, as recommended by Ryan McCarty, CFP from McCarty Money Matters. Ultimately, the decision to hold cash should be based on your individual financial goals and circumstances.
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