Cash feels safe. But holding too much cash is costly.
Inflation works quietly. It takes a little every day. Many investors do not see the loss because the number in their bank account does not change. The real buying power does.
For investors who want to grow wealth, protect what they have, and stay ahead of rising costs, it is important to understand what inflation does to idle cash.
How Inflation Eats Cash
Inflation means the cost of goods and services goes up over time. The United States has averaged about 3% inflation per year over the long term, according to the Bureau of Labor Statistics. In high-inflation years like 2021 and 2022, the rate climbed above 7%.
This means:
- If you hold $100,000 in a bank account that pays almost nothing
- And inflation is 4%
- Your money loses $4,000 of buying power that year
The number stays the same. But what you can buy with it is less.
Food, housing, equipment, labor, and services all go up. Your cash stays flat.
This is why economists at the Federal Reserve often explain that cash is a melting ice cube. It slowly shrinks, even when it looks solid. For instance, $100 in 1990 has been estimated to have the same buying power as approximately $248 in late 2024 or early 2025.
Why This Matters to Investors
Investors do not lose money only when the market goes down. They also lose money when their cash does nothing while prices rise.
Idle cash has three problems:
One. It earns less than inflation
Most savings accounts pay under 1%. Inflation is often 3% to 4% or more. This means the return is negative.
Two. It does not compound
Money grows when it works. Cash sitting in a low-yield account does not grow or compound.
Three. It delays wealth building
Every year you wait to invest is a year of lost compounding. Over the decades, this has had a huge impact.
Why High-Income Investors Are Hurt Most
High-income earners often keep large sums of cash in reserve. This feels responsible. But it creates silence.
Many investors in the medical field tell the same story:
- They earn strong income
- They save more than average
- They keep money in cash until things calm down
- Years pass
- Inflation erodes the value
- Opportunities are missed
This pattern slows wealth growth. It also delays retirement and increases stress about the future.
Why Investors Keep Cash Even When It Loses Value
It is not because they are wrong. It is because they want:
- Safety
- Liquidity
- Confidence
- A plan they understand
But cash is not the only place to find these things.
Well-built real estate deals offer predictable income, long-term value, tax benefits, and stability backed by real demand. Medical offices, multifamily housing, and other real assets grow value when inflation rises.
What Happens When Capital Works Instead of Sits
When capital is deployed into real assets, it can:
Grow Faster Than Inflation
Real estate values and rent both rise with inflation. This helps keep pace with rising costs.
Produce Cash Flow
Instead of losing 3% to 5% a year to inflation, investors may earn steady income from rent or distributions.
Reduce Taxes
Many real estate investments offer depreciation and bonus depreciation that offset income and protect returns.
Compound Over Time
When income is reinvested, wealth grows at a much faster pace.
This is why private real estate and private equity have outperformed public markets over the past 35 years, as large financial studies have shown. Dr. Cobb shares how redeploying capital and investing in strong deals helped him accelerate his net worth far faster than holding cash or traditional assets alone. He explained his process in his new book,
Wealth by Design.
A Simple Example
Imagine two investors with $100,000.
Investor A holds cash
Inflation is 4%. After one year, the buying power is $96,000. After five years, the buying power is about $80,000.
Investor B invests in real estate with a 7% return
At the end of five years, the investment grows to about $135,000. The investor also receives tax benefits and equity growth.
Let us say you receive $70,000 in depreciation and your combined tax rate is 50%. Your tax savings would be $35,000. If the asset value appreciates at 4% annually, you would also pick up another $20,000 in asset value. That brings the total return to $90,000. When added to the original $100,000 investment, the total value would be $190,000.
Same starting point. Very different outcomes.
The difference is not timing the market. It is simply putting money to work.
How Much Cash Should Investors Keep?
Experts often suggest keeping:
- Enough for emergencies
- Enough for short-term needs
- Enough for planned purchases
Anything beyond that may work better when invested in assets that fight inflation.
This does not mean rushing. It means making informed choices.
It means choosing investments with real income, real assets, real tenants, and real demand, the same approach Timberview Capital uses when vetting medical office, multifamily, and other commercial opportunities.
The Bottom Line
Inflation is quiet but powerful. Doing nothing is not neutral. It is costly.
Idle cash shrinks buying power, delays wealth building, and holds investors back from financial freedom.
Putting capital to work in real assets can help protect money, grow it faster, and create steady income for years to come.
Investors do not need to take big risks. They just need to avoid the biggest risk of all, letting their money sit still while the world gets more expensive.
If you want help exploring income-producing investments backed by real assets and real demand, our team is here to guide you.
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