If you want to achieve your investing goals, a good first step is to not guarantee failure. And yet, we’ve seen a noticeable uptick in advisors recommending to their clients that they lock-in unacceptable outcomes. They do this by suggesting large allocations to cash.

The siren song of cash is that the number never goes down. If you have an account with $100 in it, you will never log in and see it has $95. Unfortunately, the number of dollars you have is irrelevant. What matters is what those dollars can buy. “Wealth” is just storing consumption for the future. If the amount of stuff you can consume goes down, you are doing it wrong, regardless of how many dollars you have in your accounts.

The charts below show the inflation-adjusted return of gold, stocks, and cash in the 21st century. If you had 100 cheeseburgers worth of wealth at the start of the century, holding cash meant that you can now only buy 85 cheeseburgers.

Why has cash done such a poor job storing wealth? The governments of the world are currently holding a perverse competition to see who can run the most degenerate policies. This has caused the supply of cash to explode. Supply and demand 101: a big increase in the supply of a thing means the thing falls in value. If you think this is going to change anytime soon, you and I see the world very differently.

For the overwhelming majority of investors, the right amount of cash to hold in your investment accounts is the least possible. For most, that is ~0. For some, the answer is actually negative cash - meaning taking some leverage, and earning the spread between asset returns and borrowing costs over time. Regardless, good financial hygiene for everyone is to review how much cash you have on your balance sheet. If it is more than you need for groceries and baseball tickets, you can improve your long-term results by putting it to work.