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Economic uncertainty andpersistent inflationmean that you need more money for everyday expenses.
For some, this can translate into fear, which can lead to cash hoarding.
Cash hoarding is essentially when you keep excessive cash in your checking account that isnt working for you.
This practice can decrease the value of your money and preventsignificant financial growth.
Taking a simplistic approach and just looking at your checking account balance isnt going to get you far.
Overcome Cash Hoarding Bias
Generally, there are two main reasons why investors hold too much cash.
First, its timing the market.
This means waiting to buy stocks until the market dips, which doesnt yield the best results.
Instead, be sure to use a dollar-cost-averaging strategy and buy stocks consistently despite market swings.
This practice usually results in a better return over the long term.
Second, its fear.
Your money will serve you better if you save or invest it properly.
Youll benefit fromlong-term wealth accumulationand the magic of compound interest.
Its easy to spend money, especially if its readily accessible to you.
However, dont be fooled: cash hoarding should never lead to overspending.
Instead, allocate more money toward saving, investing, and paying down debt.
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