Holding cash in savings accounts or fixed deposits feels responsible. The balance does not fluctuate, interest is credited, and there is comfort in knowing your money is always there when you need it.
In the real world, that sense of safety can be misleading. I was recently told by some people who actually pay the bills that “street inflation” is going up every year. Not the neat numbers we see in official statistics but the kind you feel when renewing insurance, paying school fees, servicing a car, or ordering the same coffee that somehow costs more again.
Let us just say most people I speak to do not rely solely on central bank figures when judging their cost of living.
Meet Sarah. Sarah does not invest at all. She keeps $3 million entirely in savings and fixed deposits, earning about an average +3% a year. On paper, her money is growing. The bank statements look comforting.
Now introduce street inflation, let us call it around +7%. That means Sarah’s real return is –4% per year. After one year, her $3 million becomes $3.09 million on the statement. In purchasing-power terms, it is worth only about $2.89 million. Despite earning interest, Sarah has effectively lost over $110,000 in real value in just twelve months.
The damage compounds quietly. After five years, Sarah’s account balance looks healthy at around $3.48 million, yet its real value has fallen to roughly $2.48 million. After ten years, her savings exceed $4 million on paper but in today’s dollars, that money is worth closer to $2 million.
No market crash. No bad investments. Just inflation doing what it does best, slowly and predictably.
This is what many people miss that not investing is still a decision and it comes with its own risk. Holding everything in cash does not eliminate risk, it simply replaces market volatility with a steady loss of purchasing power.
Investing does not mean taking reckless risks or chasing returns. It means putting money to work thoughtfully, diversifying sensibly, and managing volatility in a way that fits different risk profiles. Liquidity and stability still matter but so does preservation.
Cash may feel safe. However, if street inflation keeps rising, standing still is quietly one of the riskiest positions of all.