37% of Investors Are Putting More Money Into Cash. Should You?

Many or all of the products here are from our partners that compensate us. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation. Terms may apply to offers listed on this page.


  • The stock market is rocky and recession fears are looming.
  • In light of that, putting more money into cash is not a bad idea.

Should building cash reserves be your priority right now?

It's not really a secret that 2022 has been a tough year for stock market investors. Many people are seeing losses in their brokerage accounts. For some, those losses are substantial. It's not all that surprising, then, to learn that 37% of investors have moved more money into cash over the past six months, according to New York Life's latest Wealth Watch survey.

If you're worried about the stock market, you may be inclined to move some money into cash, too. But is that a good idea? Here's why it is -- and isn't.

The case for having more cash right now

For months, financial experts have been sounding dire warnings about an impending recession. And any time there's the potential for economic conditions to decline, it's wise to have extra cash on hand in a savings account. That way, if you lose your job, you'll have money to tap to cover your bills.

Plus, a recession could send the stock market into even more of a downward spiral. If that happens, selling investments when a need for cash arises could result in even more substantial losses. So you may be better off moving some assets around now.

The case for not putting more money into cash

If you have extra money from your paychecks to work with, then using it to pad your savings account isn't a bad idea given the potential for a recession. But if your only means of freeing up cash is to sell off investments, then right now isn't the best time to do that. If you sell stocks now, you could end up taking serious losses in your portfolio based on the current state of the market.

Plus, when you sell stocks, you lose the opportunity for them to gain value over time. In fact, as a general rule, it's not a good idea to keep too much of your assets in cash. While savings accounts are finally paying a more generous amount of interest these days, for the most part, you still have the potential to earn a much higher return on your money by keeping it invested in stocks and different assets. So while there's nothing wrong with padding your emergency fund, you don't want to go overboard.

Granted, some financial experts will tell you it's now a good idea to have enough money in savings to cover a year's worth of bills. So if you spend $5,000 a month, having $60,000 in the bank may be appropriate. But if that's the case and you're already at the $60,000 mark, you probably shouldn't take your $10,000 year-end bonus and stick it into savings. Instead, you should consider investing it to grow it into a larger sum.

It's perfectly natural to adjust your approach to investing based on market conditions. But don't make the mistake of going too heavy on cash. Doing so might seem like a safer bet, but in the long run, that decision could really backfire on you.

Alert: our top-rated cash back card now has 0% intro APR until 2025

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a lengthy 0% intro APR period, a cash back rate of up to 5%, and all somehow for no annual fee! Click here to read our full review for free and apply in just 2 minutes.

Our Research Expert

Related Articles

View All Articles Learn More Link Arrow