How Much Cash Is Too Much?

Cash has become a surprisingly important part of financial planning conversations over the last several years. Following the Great Recession and suddenness of the pandemic, persistent inflation prompted the Federal Reserve to raise interest rates aggressively, and savers suddenly found themselves earning yields on cash that had been difficult to find for years. Money market funds, high-yield savings accounts, CDs and other cash equivalents became increasingly attractive places to keep money.

But market conditions change—and financial plans should evolve with them.

As interest rates move lower, the return available on cash may decline as well. At the same time, inflation can continue to erode purchasing power. For investors who accumulated significant cash balances while yields were higher, this creates an important question: How much cash should you actually keep, and when does holding too much cash become a risk of its own?

Cash Is an Important Part of a Financial Plan

Holding cash isn't inherently good or bad. What matters is the purpose that money serves.

An emergency fund is one of the most obvious reasons to maintain cash reserves. Unexpected home repairs, medical expenses, employment changes and other surprises can happen at any time. Money earmarked for expenses in the relatively near future may also belong somewhere accessible rather than being exposed to unnecessary market volatility.

For retirees, cash can serve another important role. Having funds available for upcoming spending needs may reduce the need to sell investments at an inconvenient time during a market downturn. For professionals in their peak earning years, cash can provide flexibility for upcoming purchases, career transitions, real estate decisions or other major financial goals.

Liquidity has value. The goal isn't to eliminate cash from a portfolio. It's to determine how much liquidity is appropriate for your particular circumstances.

The Hidden Cost of Holding Too Much Cash

The challenge begins when cash accumulates without a specific purpose.

For several years, higher interest rates made it easier to overlook this issue because savers could earn relatively attractive yields without accepting much investment risk. As rates decline, however, cash yields can decline with them.

Inflation adds another consideration.

Imagine your cash savings are earning 2.5% annually while inflation is running at 3.4%. Even though your account balance is earning interest, the purchasing power of that money is effectively declining by approximately 0.9% before considering other factors such as taxes.

Over one year, that difference may not feel particularly significant. Over longer periods and larger balances, however, the cumulative impact can become much more meaningful.

This is one reason investors should distinguish between money that needs to remain liquid and money that is simply sitting in cash.

Cash Can Feel Safe While Still Carrying Risk

When people think about investment risk, they often think first about stock market volatility. Cash generally doesn't experience those daily price swings, which can make it feel substantially safer.

But volatility isn't the only financial risk.

There is also purchasing-power risk: the possibility that inflation causes your money to buy less in the future. There is opportunity cost: money held in cash for long periods may miss opportunities for growth elsewhere. And there is longevity risk, particularly for retirees who may need their assets to support decades of future spending.

The appropriate balance depends on what the money is intended to accomplish.

Cash needed next year and money intended to fund a goal 15 years from now generally shouldn't be treated the same way. A financial plan can help assign different jobs to different portions of your assets rather than expecting one type of account or investment to accomplish everything.

What Can You Do With Excess Cash?

Investing excess cash doesn't necessarily mean moving it all into stocks.

Depending on an investor's objectives, risk tolerance, tax situation and timeline, there may be a range of possibilities to consider. Bonds and other fixed-income investments may play a role for some investors. A diversified investment portfolio may make sense for money with a longer time horizon. Taxable brokerage accounts can also provide access to investments without the age-related withdrawal rules commonly associated with retirement accounts.

That last point is particularly important. There is sometimes a misconception that investing means putting additional money into a 401(k) or IRA and accepting restrictions on when it can be accessed. Retirement accounts are valuable planning tools, but they aren't the only way to invest.

For professionals in their highest earning years, taxable investments can potentially complement retirement savings while creating greater flexibility for goals before retirement. For recently retired investors, coordinating cash, fixed income and longer-term investments can help create a strategy designed around both current spending and future needs.

How Much Cash Should You Keep?

There isn't one cash target that works for everyone.

Rules of thumb about keeping several months of expenses in an emergency fund can provide a starting point, but financial planning becomes more nuanced as wealth and financial responsibilities increase. Someone approaching retirement may have very different liquidity needs from a professional with stable income and decades until retirement.

Rather than focusing exclusively on a specific dollar amount, consider what your cash is intended to fund. How much is your emergency reserve? Are there major purchases or expenses expected over the next few years? How stable is your income? If you're retired, where will upcoming distributions come from? And once those needs are accounted for, how much cash remains without a defined purpose?

That final amount is often where a deeper conversation becomes worthwhile.

Give Every Dollar a Purpose

Cash serves an important role in nearly every financial plan. The objective isn't to chase the highest possible return on every dollar or invest money that needs to remain readily available.

Instead, the goal is intentionality.

As interest rates and inflation change, a cash strategy that made sense a few years ago may no longer be the best fit today. Periodically reviewing your savings, investment accounts and upcoming financial needs can help determine whether your money is positioned appropriately for both the life you're living now and the goals you're working toward.

If you've accumulated a larger cash balance, are approaching retirement, recently retired, or simply haven't reviewed how much you're holding in savings, this may be a good time to revisit the conversation. A comprehensive financial plan can help determine how much cash you truly need, where that cash should be held, and whether excess savings could be put to work more effectively elsewhere.

The Hidden Cost of Constant Comparison

In a world where nearly everyone has an online presence, comparison can feel almost unavoidable. A few minutes of scrolling can reveal career announcements, home renovations, new cars, luxury vacations, and countless other visible signs of success. Even those who feel content with their lives may begin wondering whether they should be earning more, accomplishing more, or living differently.

Of course, comparison existed long before social media. People have always noticed when a neighbor purchased a larger home, upgraded the family car, or returned from an expensive vacation. The difference today is the frequency and reach of those comparisons. Instead of occasionally observing the lives of those nearby, people are continually presented with carefully selected moments from hundreds—or even thousands—of others.

What remains unseen is the complete financial picture behind those moments. It is impossible to know whether a vacation was comfortably funded or placed on a credit card, what tradeoffs came with the larger home, or whether financial stress exists beyond the photograph. More importantly, even with all the details, those choices may not reflect the life another person would genuinely want.

Defining Success on Personal Terms

The hidden cost of comparison extends beyond envy or dissatisfaction. Over time, it can influence important decisions. Someone else’s visible lifestyle may quietly become the standard used to evaluate personal progress, leading people to pursue goals because they appear successful from the outside—not because they are personally meaningful.

“Manifestation” has become a popular term for envisioning a desired life. Whatever language is used, its practical value begins with setting aside time to define that life clearly.

What would create a genuine sense of security? Which experiences feel most important? How should time be spent? Who should benefit from the wealth being built? What would a meaningful career, retirement, or legacy look like?

Answering these questions makes it easier to recognize opportunities, make intentional decisions, and direct financial resources toward the priorities that matter most.

A Financial Plan Is Not a Competition

Financial planning is often discussed through numbers: income, savings rates, investment returns, account balances, and retirement projections. These measurements are important, but they are only meaningful when connected to a personal purpose.

A financial plan should not be evaluated against another person’s goals. Two people with similar incomes can have entirely different priorities. One may hope to retire early, while another finds meaning in continuing to work. One household may prioritize travel and experiences, while another wants to build a business, purchase a second home, support aging parents, or leave a substantial legacy.

None of these paths is inherently better. The appropriate strategy is the one designed around an individual’s circumstances, values, responsibilities, and vision for the future.

This is why generalized financial benchmarks can only go so far. Rules of thumb may provide a useful starting point, but they cannot fully account for the complexity of an individual life. A highly compensated professional with variable income will have different planning needs than someone approaching retirement. A creative professional with irregular earnings may require a different cash-flow strategy than an employee receiving a predictable salary. Someone supporting multiple generations of family will make different decisions than someone primarily pursuing personal financial independence.

A holistic relationship with a wealth manager and financial planner can help bring these pieces together. However, even the most carefully constructed strategy must begin with a clear understanding of what the individual wants—separate from what peers, relatives, professional circles, or social media suggest they should want.

Creating Space for a Personal Check-In

Reflection does not always happen automatically. Sometimes a framework is needed to pause, ask better questions, and listen more carefully to the answers.

That framework might come from a book such as The Pivot Year, a business coach, counselor, podcast, mentor, or trusted professional. The particular resource matters less than creating space outside the momentum of daily life to consider whether current choices still align with changing priorities.

Goals are not static. Priorities established five or ten years ago may no longer fit present circumstances. Careers change. Families grow. Relationships evolve. Health, interests, responsibilities, and definitions of success can shift. A financial plan should evolve alongside those changes.

Building a Life That Feels Authentic

Comparison asks whether someone is keeping up. Thoughtful planning asks whether that person is moving in the right direction.

The goal is not to ignore the world or avoid every comparison. It is to become clear enough about personal priorities that someone else’s choices do not automatically become instructions.

Financial planning, at its best, is not simply about accumulating the largest possible number. It is about using resources intentionally to create security, flexibility, opportunity, and a life that feels personally meaningful.

Sometimes the most valuable financial step is not immediately opening an account, changing an investment, or adjusting a budget. Sometimes it is pausing long enough to ask:

What is all of this ultimately building toward?

Why Patience Is Still One of the Greatest Investment Strategies

We're living in a world that rewards speed.

Need groceries? They can arrive in an hour. Want to learn a new skill? Thousands of videos are available instantly. Have a question? Artificial intelligence can generate an answer in seconds. We've become accustomed to immediate results in nearly every aspect of our lives.

Yet some of the most meaningful things in life still refuse to be rushed.

Strong relationships are built over years, not weeks. Successful careers are shaped by consistent effort rather than overnight success. Businesses grow through continual refinement, and financial independence is rarely achieved through one perfect investment. Instead, it's the result of hundreds—sometimes thousands—of thoughtful decisions made consistently over time.

As investors, it's easy to forget that while technology has accelerated the pace of information, it hasn't changed the fundamental principles of building wealth.

Market Rotations Are a Reminder That Patience Matters

During our recent Quarterly Market Outlook, we discussed another market rotation—a natural shift in leadership from one sector, industry, or investment style to another.

These rotations happen throughout every market cycle. Companies that lead one year often give way to different leaders the next. While headlines frequently focus on whichever investments are performing best today, history reminds us that markets are constantly evolving.

For investors in their peak earning years, this can be especially challenging. Between demanding careers, family responsibilities, and an endless stream of financial news, it's tempting to believe every headline requires action.

Likewise, for those approaching or enjoying retirement, periods of market change can understandably create questions about whether their portfolio remains aligned with their long-term goals.

In both cases, reacting emotionally to short-term market movements often works against the very outcomes investors hope to achieve.

Wealth Is Built Through Consistency, Not Constant Change

One of my favorite analogies is planting a garden.

You wouldn't plant seeds on Saturday and expect to harvest vegetables by Monday. The growth begins long before you can see it. Healthy roots develop beneath the surface through consistent watering, sunlight, and care.

Investing works much the same way.

Long-term wealth is created through disciplined saving, thoughtful portfolio construction, tax-efficient planning, regular reviews, and the willingness to stay committed through changing market environments.

Patience isn't passive.

It's an active decision to trust a well-designed financial plan while making thoughtful adjustments as life changes—not because markets are noisy, but because your goals evolve.

Financial Planning Is About More Than Investment Returns

One of the biggest misconceptions about working with a financial advisor is that success is measured only by portfolio performance.

While investment management is certainly important, comprehensive financial planning extends much further.

It means evaluating retirement readiness, protecting your family through appropriate insurance strategies, reviewing estate planning documents, minimizing taxes where possible, planning charitable giving, managing cash flow, and ensuring your investments continue to reflect your personal goals and values.

For many of our clients—including successful professionals, business owners, creatives, and those transitioning into retirement—financial confidence doesn't come from trying to predict the next market move.

It comes from knowing there's a thoughtful strategy in place regardless of what markets decide to do next.

The Power of Small Decisions

When people look back on financial success, they often search for one defining moment.

The reality is usually much less dramatic.

Increasing retirement contributions each year.

Rebalancing a portfolio during annual reviews.

Updating beneficiaries after major life events.

Building an emergency reserve.

Paying down debt consistently.

Teaching children healthy financial habits.

None of these decisions make headlines.

Together, however, they create extraordinary outcomes over decades.

Just as compound interest rewards patience, life tends to reward consistency.

Growing Together

Launching Elswick Investments has reinforced these same principles for me personally.

Building a firm centered on relationships, thoughtful advice, and long-term planning isn't something that happens overnight. Like every worthwhile endeavor, it continues to grow through listening, learning, refining, and serving others well.

I'm incredibly grateful for the trust our clients have placed in us and for the opportunity to walk alongside them through each season of life. Watching clients accomplish goals they once thought were years away remains one of the most rewarding parts of my work.

In a world that encourages us to expect immediate results, patience can feel countercultural.

Yet whether we're cultivating a garden, building a business, strengthening a family, or creating lasting financial security, the principle remains the same:

The most meaningful growth often happens quietly, beneath the surface, long before anyone else can see it.

If you're looking for a financial planning partner who believes successful investing is about more than chasing headlines—and instead focuses on building a strategy that supports the life you want to live—we'd love to start a conversation.

Your Mid-Year Financial Check-In: Are Your Priorities Still Driving Your Financial Plan?

By July, many of us find ourselves running on momentum.

Tax season is behind us. Summer calendars fill with vacations, family gatherings, weddings, and long weekends. Work projects continue moving at full speed, and before we know it, half the year has quietly passed.

This summer has brought its share of surprises. Here in Chicago, smoke from the Canadian wildfires filtered enough sunlight to noticeably reduce temperatures and even lower air conditioning demand for many households. It's an unusual consequence of an incredibly tragic event—one that reminds us how connected our lives are to circumstances well beyond our own neighborhoods.

Moments like these naturally encourage reflection.

The Middle of the Year Is the Perfect Time for a Financial Review

Whether you're a young professional building wealth during your highest earning years or you've recently retired and are adjusting to a new pace of life, the middle of the year is an ideal opportunity to step back and ask an important question:

Does my financial plan still support the life I want to live?

Back in January, many of us identified goals we'd like to accomplish. Maybe you planned to maximize your retirement contributions, save for a home, travel more, spend additional time with family, reduce debt, or simply create more balance between work and life.

Six months later, life may look different.

Perhaps you've received a promotion, changed careers, welcomed a child, cared for aging parents, sold a business, or entered retirement. Sometimes our circumstances change. Other times, our priorities simply become clearer.

Both deserve attention.

Success Isn't Just About Earning More

For many professionals in their 30s, 40s, and early 50s, career opportunities can arrive quickly. Higher salaries often come with greater responsibilities, more complex tax situations, concentrated stock positions, equity compensation, and less personal time.

It's easy to become so focused on building wealth that you rarely pause to ask what you're building it for.

Take an hour during your next flight without your phone.

Spend a quiet morning with a notebook and a cup of coffee.

Ask yourself:

• Am I spending my money in ways that reflect what I truly value?

• Have my financial goals changed this year?

• Is my investment strategy still aligned with those goals?

• Am I making time for experiences I'll remember years from now?

Financial independence isn't simply about accumulating assets. It's about creating the freedom to live intentionally.

Retirement: Your Financial Plan Enters a New Chapter

Retirement is one of life's biggest transitions.

For decades, your financial plan centered around accumulating assets. Now, the focus shifts toward creating sustainable income, managing taxes efficiently, preserving purchasing power against inflation, and spending confidently without constantly wondering whether you're "doing it right."

Equally important is deciding how you want to spend your time.

Many retirees discover that the greatest challenge isn't financial—it's personal. How will you use the freedom you've worked so hard to achieve? What relationships deserve more attention? What experiences have you been postponing?

Those questions deserve just as much planning as your investment portfolio.

Financial Planning Should Evolve as Your Life Evolves

One of the biggest misconceptions about financial planning is that it's primarily about investments.

In reality, investments are simply one tool.

A comprehensive financial plan should evolve alongside your career, family, health, retirement, charitable giving, and personal values. As life changes, your investment strategy, tax planning, estate planning, and cash flow strategy should be revisited as well.

Sometimes the most meaningful adjustment isn't changing your portfolio allocation.

It's realizing your priorities have changed.

The Second Half of the Year Is Full of Opportunity

You don't need to wait until January to make meaningful progress.

The next six months can be an opportunity to revisit retirement savings goals, review investment accounts, update beneficiaries, plan charitable gifts, prepare for year-end tax strategies, or finally have the conversation you've been putting off with someone you love.

Small decisions made consistently often have the greatest long-term impact.

As you move through the rest of the year, I encourage you to slow down—if only for an afternoon. Reflect on what's changed, what matters most today, and whether your financial decisions continue to support the life you're building.

Your wealth isn't the destination.

It's a resource that allows you to spend more time with the people you love, pursue meaningful work, give generously, retire confidently, and create memories that outlast any market cycle.

Those are goals worth checking in on—at any point during the year.