Hiding your money under a mattress as an investment strategy is probably not a good idea. You put your money at all sorts of risk: fire, floods, forgetfulness. Furthermore, one of the first places thieves may go to look for your stash is under your mattress.

Despite these potential issues, a recent AARP survey revealed that millions of Americans aged 55+ simply stash sums of cash at home.¹

Keeping a small amount of cash around the house might be a good idea for emergencies, but in the long run, the idle-cash-under-the-mattress choice represents a role money shouldn’t play in your life. Since money is obviously transactional in nature, it should be producing something for you. After all, you worked for it; it should return the favor.

Our marketplace economy provides ample opportunities for your money—and hiding it under the mattress is certainly not one of them.

Here are two interesting facts about inflation and investing:

• Inflation
Inflation, an overall rise in the cost of goods and services, started trending higher in 2021 and continued on that course early in 2022. What’s next for inflation is unclear, but today’s higher prices are reminding some of the high-inflation years of the 1970s.

With an inflation rate of 3%, an income of $50,000 today would have just over $32,000 in purchasing power 15 years later: that’s a 35% decline. Said differently, to maintain the lifestyle you enjoy on a $50,000 income today, you would need a $77,900 income after 15 years of 3% inflation. This is a hypothetical example used for illustrative purposes only.

• Investing
The decision to invest is also an acknowledgment that investing comes with certain risks. Not all investments will do well, and some may lose money. However, without risk, there would be no opportunity to earn the higher returns that may help you grow your wealth.

To manage investment risk, consider maintaining a broad diversification of your investments that reflects your personal risk tolerance, time horizon, and financial goals. And remember that diversification is an approach that helps manage investment risk; it does not eliminate the risk of loss if security prices decline

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