When it comes to money, it’s completely natural to want to feel safe. For many people, that means keeping a healthy amount of cash sitting in the bank just in case.
But there’s a catch. While cash might feel like the safest option, holding too much of it for too long could actually be doing more harm than good.
Let’s take a look at why, and what you can do to strike the right balance.
Cash feels safe, but is it silently shrinking your savings?
You might glance at your bank account and feel a sense of comfort. The number hasn’t gone down. In fact, it may have even grown very slightly with interest. However, the reality is that inflation is often quietly reducing your money’s purchasing power.
Say you have $10,000 sitting in a savings account earning little to no interest. If inflation is running at 4 per cent per year, that money effectively buys 4 per cent less this time next year. Over time, the real value of your savings erodes even if the dollar amount stays the same.
The hidden cost of ‘just in case’ money
We all need some cash set aside for life’s unexpected moments. But there’s a difference between an emergency fund and letting your long-term savings sit idle.
Every dollar left in a low-interest account is a dollar not working for you. That’s what’s known as opportunity cost. The lost potential your money could have had if it were invested or placed in a higher-earning option. Whether it’s missed compounding interest, lower returns or simply not keeping up with the cost of living, too much cash on the sidelines can quietly chip away at your financial well-being.
Emergency fund vs surplus cash
So how much cash should you really keep? As a general guide, aim to have three to six months of essential living expenses set aside in an accessible account. This acts as your emergency buffer and helps you sleep better at night. Anything above that is your surplus, and that’s where smarter options come in.
Why a Term Investment can offer the best of both worlds
If you’re looking for a way to make your surplus cash work harder without taking on unnecessary risk, a Term Investment can be a great middle ground.
With APS Term Investments, you can enjoy:
- Fixed, competitive returns (currently up to 6.00% p.a*)
- Flexible terms from just 6 to 24 months
- Confidence your return is locked in, without market swings
- No unexpected maintenance or joining fees
It’s a simple, steady way to protect your money from inflation while still giving you access in a timeframe that suits your goals.
How APS helps you make confident, easy decisions
We believe financial peace of mind starts with clear and compassionate guidance. Unlike the big banks, we’re not here to sell you something you don’t need. Our friendly team can walk you through your options and help you make decisions that feel right for you. We’ve been around for over 120 years, and pride ourselves on always putting our members and clients first.
Learn more about Term Investments or explore all APS services.
*APS Notes is not a bank product. No independent assessment has been made about the risk of investing in APS Notes and there is a risk you may lose some or all of your money when investing with APS Savings Ltd. Any information about APS Notes is provided by APS Savings Ltd and has been prepared without taking into account your objectives, financial situation or needs. Applications for deposit notes can only be made on the Investment Application Form which accompanies the prospectus issued by APS Savings Ltd. Please read the prospectus carefully and consider the appropriateness of this information before deciding whether to make an investment.