Q: I’m seeing posts on social media about keeping cash at home during rapid inflation. Is this a good practice?
A: Keeping large amounts of cash in envelopes, kitchen drawers or stuffed under the mattress is not recommended during times of high inflation – or any time.
Why is it a bad idea to keep cash at home?
While it’s perfectly OK to keep some cash at home, storing a large amount of funds in your house brings two big disadvantages:
- The money can be lost or stolen. Hiding cash under the mattress, behind a picture frame or anywhere in your house always carries the risk of being misplaced, damaged or stolen. Unfortunately, there is no way to trace or reclaim lost or stolen cash.
- The money isn’t growing. When cash doesn’t grow, it loses some of its value. This is especially true during times of high inflation. The current inflation rate is 8.5%. This means, if you’d keep $1,000 at home for the next year and inflation stays at 8.5% during that time, your cash would be worth only $985. Of course, if inflation rates increase, the loss would increase as well.
Where is the best place to keep cash?
Here are some places you may want to keep your cash at this time:
- Savings account. A savings account is a secure place to keep extra funds. When you open a savings account at , there’s no risk of your money being lost or stolen.
- Precious metals. Precious metals, like gold, silver and platinum, have proven to hold their value even in times of inflation and a volatile stock market.
- Share certificates. A share certificate is a savings account that’s [federally] insured, has a fixed dividend rate and a fixed date of maturity. The fixed dividend rate will remain unaffected by the fluctuating national interest rate.
Inflation is high, but that doesn’t mean it’s a good idea to hoard your cash at home. Follow the tips outlined above to find the perfect place to park your cash.
Your Turn: How are you protecting your savings against inflation? Tell us about it in the comments.