The Pros and Cons of Banking Your Money

When keeping it insulated from volatility may mean losing value

With the threat of war, the fallout from a pandemic and concerns about climate change hanging over our heads, our world has never seemed like a more uncertain place. At times like these, some people prefer to build cash in the bank — to leave money where it’s steady than to ride the ups and downs of financial markets.

But is this really a smart move? 

Investment returns

The great thing about banking your money is the absence of market volatility. Whatever you put in will stay in your account until you withdraw it. But limiting potential downside also means your money may not have a chance to grow. In the current low interest rate environment, even a savings account will probably offer little growth by way of interest. This matters because the value of money changes over time, and a dollar today is worth more than a dollar tomorrow.

Purchasing power

When an economy experiences inflation, prices go up, meaning your money will buy you less as time goes by. At an inflation rate of 7%, $100 today will only buy $93 worth of goods and services in a year. Given that inflation is such a serious concern for our economy, it’s important to remember that, while your bank balance may stay the same, when it comes to purchasing power, you’re losing ground!


Of course, having readily accessible cash in the bank offers financial confidence and helps address planned and unplanned life events. However, keeping too much money in the bank — beyond an optimal balance — could tempt you into greater spending at the cost of your long-term financial goals.

Bank accounts and the stock market are not the only places to store extra cash. For more on how you can use life insurance as part of a strategy for reliable growth and to access liquidity, talk to your financial professional.

  1. Some whole life polices do not have cash values in the first two years of the policy and don’t
      pay a dividend until the policy’s third year. Talk to your financial representative and refer to
      your individual whole life policy illustration for more information.
  2. Policy benefits are reduced by any outstanding loan or loan interest and/or withdrawals.
      Dividends, if any, are affected by policy loans and loan interest. Withdrawals above the cost
      basis may result in taxable ordinary income. If the policy lapses, or is surrendered, any
      outstanding loans considered gain in the policy may be subject to ordinary income taxes. If the
      policy is a Modified Endowment Contract (MEC), loans are treated like withdrawals, but as
      gain first, subject to ordinary income taxes. If the policy owner is under 59 ½, any taxable
      withdrawal may also be subject to a 10% federal tax penalty.

Pub11482  2022-136069 Exp. 4/24

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