For both personal households and non-profit or for-profit organizations, the pandemic period of the past two years has brought great uncertainty as to its impact on respective income streams.  The result for many has been a shift to the maximum safety of cash, money markets and similar vehicles, essentially leaving large amounts of assets sitting idly at the bank, earning little to nothing.

Meanwhile, economic conditions have changed rapidly over this time as we move closer to reaching what we hope is the “endemic” stage of COVID-19. These economic changes are primarily the result of a return to an evolved version of “business as normal” and from unprecedented global and fiscal stimulus deemed necessary to bridge the global economy through this pandemic period. Now, the proverbial economic “bill” has now come due for this stimulus, leaving consumers and businesses alike to experience significantly higher and sustained inflation, reaching levels not seen over most of the past 40 years!

To add to the uncertainty, in recent weeks new geopolitical uncertainty has surfaced, stemming from Russia’s invasion of Ukraine.  The result is that many of these same individuals and businesses once again feel paralyzed to commit to longer-term investments and move away from the safety of cash and similar vehicles sitting at their banking institutions these past couple years.

Meanwhile, due to the longer-term impacts of the current high inflation environment, doing nothing may be the most dangerous decision a household or organization could make.  That is because physical cash is depreciating at a rate more like the used car market, worth 5-7% less each year at current inflation rates.  At that rate, just 3 years from now we are effectively giving away 20-30% of our assets at the bank by doing nothing versus taking steps to secure it for the long-term.

So, what can individuals and business do to avoid moving backwards by standing still? It starts with understanding how to balance your assets for the needs of today, tomorrow, and for the long-term. Since each household and business has different needs and unique goals, there is no one size fits all approach.  However, there are some tangible actions we can consider and some rules of thumb we can apply, to begin mapping out this very individualized picture:

  • First and foremost, for whatever balances are being kept at the bank to pay bills, we should first ensure that every dollar is covered by FDIC insurance. For individuals and businesses this is $250,000 per bank, or $500,000 for personal households.
  • Second, we should keep a separately dedicated emergency fund or short-term reserve account, to keep up to 5 years of possible cash flow shortfalls, or up to 6 months of our anticipated annual income.
  • Next, we should look to maximize the levels of interest provided by these safe assets, even if they are below the current inflation rate. This typically means limiting the assets in a checking or bank operating account and leaning more heavily on CDs and money market accounts, remember every dollar of interest counts!
  • Lastly, for all remaining cash assets that now have at minimum a 5-year time horizon, we should look to find long-term investments that not only keep up with current inflation rates, but vehicles that have historically outpaced inflation over the long-term according to your goals.

Many of our clients have told us that the hardest step to take in addressing these issues was the first one. Whether it is taking action yourself or recognizing that you need help to begin to address these challenges, RTD is here and happy to help. With a deep team of experienced CFP® professionals, each with individual specialties in serving the diverse needs of individuals and households as well as advisors dedicated in working with non-profit and for-profit organizations, RTD possess the experience to help you take that first step to avoid moving backwards by standing still.

If you recognize that your household or business could benefit from the financial advice and modeling needed to make the best possible decisions in these areas, we can set up a complimentary virtual meeting or phone call to discuss further. You can do this by emailing us directly at, or visit us on our website at to learn more.