Even though the stock market has reached record highs at certain points this year, there is still a ton of money on the sidelines.
Ready for it? Nearly $8 trillion is in money market funds, which are investments considered cash equivalents.1
This amount does not factor in the amount of literal cash that might be in safes or “under the mattress”.
One reason that this number is so high is that money market funds are paying much more than the low-interest rate environment post-Great Financial Crisis.
Another reason is that households should have monies set aside for emergencies and for planned short term upcoming needs like weddings, car purchases, trips, etc.
Here’s a common mistake to avoid. You should not treat all your money the same.
Your total assets may have many kinds of purposes. The key is to match specific money with its specific purpose.
I’m a big fan of emergency funds and planning for shorter term needs, but you may want to check how much cash or cash equivalents (CDs, Treasury Bills, and money-market-like instruments) are sitting outside of your accounts or inside of your accounts.
As a wealth advisor, I’ve heard far too many stories of people having significant cash parked in accounts that aren’t earning much interest.
Sometimes monies should remain uninvested, but it can be easy to have too much cash sitting for far too long because it’s out of sight and out of mind.
Time flies.
And time is one of the most important parts of investing.
Time pays too.
Some of your money may need to be marked for time IN the market to benefit from compound interest, while other parts of your money should be marked for time OUT of the market to make sure it is there to spend over the short term.
But if it’s spending too much time out, you might need some financial planning help to go over your options. This JPMorgan chart speaks for itself on the magic of compound interest:2
Don’t forget bonds either. Though they have interest rate risk, they may outperform cash-oriented money market funds and avoid cash drag. Depending on the short-term need and financial situation, a variety of bonds can be another option.3
If you or someone you know doesn’t know the why behind their invested money—or the cash sitting on the sidelines—meet with one of our advisors.
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Sources:
1. “Student of the Market” (June 2026), page 9. Accessed online.
2. “Guide to the Markets” (As of May 29, 2026), page 60. Accessed online.
3. “Student of the Market” (June 2026), page 9. Accessed online.