Am I Being Silly Holding $77,000 in Cash Instead of Investing It?

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Spend a little time on Reddit and, among other things, you'll be able to peek into other people's financial lives, learning a little or a lot along the way. For example, I recently ran across a 29-year-old asking for financial advice -- and getting a lot of it.

Here's a look at their question, along with my answer to it. See what you think and perhaps consider how you would answer the question.

On Reddit, someone asks: Am I Being Silly Holding $77,000 in Cash Instead of Investing It?

You can read the full post here:

Am I Silly & Too Cash Heavy?
byu/-JustAGuyFromDC inpersonalfinance

Are you in debt? Maybe pay that off first

The questioner on Reddit has no debt, which is great. But for anyone reading this who is saddled with high-interest-rate debt such as that from credit cards, it's vital to get out of that debt.

The average credit card interest rate was recently 25.37%, per Forbes Advisor. If you owe, say, $40,000 and you're being charged 25%, you're looking at paying $10,000 per year just in interest. And if you fail to pay any of that, your balance owed grows, costing you even more in interest. Ouch!

Do you have an emergency fund? You should

Most of us need to have an emergency fund -- full of enough accessible money to support us for at least three months, if not longer. The Reddit questioner noted that they spend up to $3,500 per month. So they should have an emergency fund with $10,500 or more, which could help them get by for three months. If they want to be more conservative, they could sock away six months' or a year's worth of expenses, which would be $21,000 or $42,000, respectively.

With $77,000 in cash, they arguably already have that emergency fund -- and more. That money could sustain them for 22 months -- which does seem like overkill, as they could probably land another job within a year or so, if not sooner.

How cash grows -- or doesn't

Next, let's look at how cash grows. Spoiler: It doesn't. It just sits there.

In fact, thanks to inflation, it becomes worth less and less each year. Inflation has averaged close to 3% annually over many decades. At that rate, whatever costs you $1,000 today is likely to cost you $2,000 in 20 or 25 years.

So sure, you could keep $77,000 in cash, but in 20 or 25 years, it will only have the purchasing power of around $38,500 now.

The questioner didn't specify just where their cash was being kept. If it's in a box under their bed, that's bad. But if it's in a money market account or a certificate of deposit (CD), that's actually not so bad -- since interest rates these days are higher than they've been in recent years. Some money market accounts are paying more than 4% these days.

How to deploy your money to build a portfolio

It's clear that the questioner is saving and investing for their future -- as should we all. It's not clear how, though, so permit me to remind them that it's hard to beat stocks for long-term wealth building. Check out the table below, offering the returns of various asset classes between 1802 and 2021, per Wharton School finance professor Jeremy Siegel:

Data source: Stocks for the Long Run, Jeremy Siegel.
*A nominal return, as opposed to a "real" return, doesn't factor in the effects of inflation.

Here's how your money might grow at 8%:

Data source: Calculations by author.

If you want to spend the least time thinking about your portfolio, you might want to just stick with one or more index funds, such as the ones below:

Data source: Morningstar.com (as of June 26, 2025).

No one should just jump into any fund without reading up on it first. You might do the least reading up with a simple S&P 500 index fund, though, as it will spread your dollars across 500 of America's biggest companies. If you're drawn to the fatter returns above, know that many of them are derived from growth stocks, which can fall sharply during a market downturn. So perhaps spread your money across a handful of funds. (Also note that the returns above reflect an unusually fast-growing stock market.)

While the Reddit questioner might be excited at the prospect of $100,000 in cash, they should know that it can also be very exciting to see your invested money grow like gangbusters over time.

Don't think just in dollars -- focus on your overall plan

It's also smart to avoid thinking in terms of absolute dollars sitting here or there. Instead, think about your overall portfolio, and the percentage of it you've devoted to cash or stocks or other assets.

Focus more on your overall financial plan. Think about your goals -- such as a down payment for a house, a comfortable retirement, college expenses for your kids, and so on -- and how you'll save for and achieve them.

Retiring at 50 is possible!

It's not easy to retire early, but this questioner may manage it. For starters, they're still quite young, with about 20 years until retirement, and they're earning a solid income. They will likely get pay raises over time and they're already investing a big portion of their paycheck. If and when they do get married, having two incomes can help them save even more -- assuming both spouses are on the same page financially, willing to work and save together toward the same goals.

In sum, having $77,000 in cash is far from a stupid thing. But there are more effective ways to deploy your dollars.