3 On Your Side: More People Keeping Cash For The Long-Term Rather Than Investing

By Jim Donovan

PHILADELPHIA (CBS) -- Do you stash more of your money in the bank these days, instead of opting to invest?  If the answer is yes, you're not alone. 3 On Your Side consumer reporter Jim Donovan finds that more people are keeping cash for the long-term rather than investing.

David McCombie runs a private investment company, but you'd be surprised where he keeps most of his money.

"I've decided to keep my money in cash rather than the public markets because it provides me with the liquidity to react quickly," said McCombie.

And McCombie isn't alone. A Bankrate.com survey found, overall, a quarter of Americans prefer cash to other assets.

"Investors of all ages have been hunkering down in cash just because they don't have the stomach for the potential for market volatility," said Greg McBride with Bankrate.com.

Bankrate finds 39 percent of 18 to 29-year-olds are more likely to turn their backs to the markets and choose cash as their number one long term investment.

"The biggest risk of people hoarding cash for long-term investments is that we're going to end up with an entire generation of people that are well short of what they need to retire in comfort," said McBride.

While it's important to keep some cash to cover any short-term needs and emergencies.

"Favoring cash over other investment options for the long haul is a recipe for underperformance because the low rates of return will not grow your buying power. Over time you're going to see inflation eating away at the value of that money," said McBride.

Another recent survey found that more than half of Americans say they don't invest in the stock or bond markets at all with 12 percent of those people saying they just don't trust the market.

 

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