The Hidden Risks of Holding Cash for 2026

December 25, 2025 - 01:10

Canadian financial advisers warn that remaining on the sidelines with cash could pose greater risks than many investors realize. While it may seem prudent to hold onto cash in uncertain times, experts argue that this "safe" strategy could lead to missed investment opportunities and the erosion of purchasing power due to inflation.

As inflation continues to rise, the value of cash diminishes, meaning that sitting idly can result in significant losses in real terms. Investors who choose to keep their money in cash may find themselves unable to capitalize on potential market gains, particularly as economic conditions improve.

Moreover, the opportunity cost of not investing can be substantial, as stock markets and other investment vehicles often yield higher returns over time compared to cash holdings. Financial advisers emphasize the importance of a balanced approach, encouraging investors to consider diversified portfolios that can weather economic fluctuations while still providing growth potential.

In light of these factors, it may be time for investors to reassess their strategies and consider the long-term implications of holding cash.