Why cash is not king

Cash is great when it comes to paying for stuff like take away food and ice cream, but it doesn’t get you far when it comes to your super savings strategy.

It won’t deliver growth

When you save money in super, your account typically grows with contributions and investment earnings. With contributions, you and your employer can make payments to your account - but did you know most of the growth in super savings over time comes from how your money is invested?

When you choose a Cash investment strategy, at best that gets you the going cash rate. Often this barely covers inflation, which means by way of purchasing power you’re hardly breaking even, and potentially losing the value of your money over time and hence what you can buy with that money. 

Generally, investing in cash is only wise if it’s temporary or you need access to the money in the near future. Let’s put it this way: you’re saving for a house and you have $50,000 you’ll need in three months’ time for your deposit. You don’t want the value of your money to fall, you put in the bank in a regular savings account or a term deposit that gets you about at best 1.5% interest. So, in three months when you need the cash for your deposit, you can access it right away and it’s worth $50,188, no harm no foul. But let’s be honest, if you’re investing your money for the future, you’d hope to get more than a 1.5% return. If you invest $50,000 at 1.5% and expect to draw on your money in 10, 20, or 30 years’ time it wouldn’t be worth much to you by then. 

It’s not a safe haven

People tend to view cash as a ‘safe’ investment strategy – and to an extent, it can be for the short term, but it’s not a good - or safe – long-term investment strategy.
When it comes to super, you need to consider a long-term investment. You need to invest it to ensure that it grows year on year, enough to meet your financial goals and maintain value over time. A well-diversified investment strategy with exposure to growth assets is generally the ticket, how much exposure to growth assets will depend on you, with regard to your investment timeframe and expectations when it comes to risk and return. 

When you do get your investment strategy sorted, it’s important to stay put. Too often people switch to cash when markets take a dive, thinking it’s a safe haven but doing so locks in losses which lead to longer-term damage to your savings.

If you’re really driven to de-risk during a downturn, you may not be invested in the right investment strategy for your risk profile. It’s a good idea to assess your investor profile, we can help you with this.

You can call us for free advice over the phone, after a few questions with a planner to explore your financial goals and the sort of investor you are.  

Key takeaways

If you want a safe bet, cash is not the answer - choose a long-term investment strategy that aligns with your expected risk and return and stick to it. 

Cash can be to your detriment if you use it a long-term investment strategy or a ‘false’ haven during periods of a market downturn.

As always, if you’re unsure about your investment strategy speak to one of our financial planners.


The information on this page has been issued by Maritime Financial Services Pty Limited (MFS). It contains general information that doesn’t take into account your individual objectives, financial situation or needs. It’s important to consider how appropriate this general information is in relation to your situation before making an investment decision. We recommend that you seek financial advice before making any decisions regarding your super or investments. The information on this page is current at the time of publishing.