"Bridgewater Associates founder Ray Dalio once said, "Cash is trash," and, "Get out of cash." Evidently, he was concerned about the erosion of the value of the U.S. dollar (USD) and how this could impact one's portfolio. Fast-forward to 2025, and a Reddit user asks, "[W]hat are we doing to protect against the devaluation of the USD? " It's a lightning-rod question that will prompt a variety of responses and solutions."
"Surely, you've noticed that today's dollar doesn't have the purchasing power that it did in previous decades. Alas, long gone are the days when one could buy a typical brand-new car for $10,000 or a new house for $50,000. Now, the average new car costs just shy of $50,000 and the USD has been devalued by 11.24% since its year-to-date high on Jan. 13, just one week before the Trump administration arrived in D.C."
"But don't draw the wrong conclusion from Dalio's 'cash is trash' warning, though. It can destroy your portfolio's value over time to have an all-cash position for too long, but the USD is still a highly liquid and globally accepted form of money. Consequently, it makes sense to have some cash handy for emergency purchases. In addition, it's a good idea to keep some cash as 'dry powder' to buy stocks and other financial a"
Rising inflation and long-term USD devaluation erode purchasing power and can reduce portfolio value if too much cash is held. The dollar has lost significant value versus prior decades, with average new-car prices rising toward $50,000 and the USD down 11.24% from its year-to-date high on Jan. 13. Cash remains highly liquid and valuable for emergencies and as dry powder to buy opportunities. To protect portfolios, retain some cash for liquidity, maintain dry powder for market opportunities, and diversify into low-fee ETFs and inflation-resistant assets like gold and Bitcoin.
Read at 24/7 Wall St.
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