How much wealth do rich Americans keep in cash? A few ways to boost your own cash reserves for the future

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Wealthy folks know that keeping one’s wealth invested is important. After all, the U.S. dollar has lost more than 87% of its value since 1971. Those who build generational wealth know that hanging onto cash isn’t the answer — keeping one’s wealth means smart investing.

But investing has its own risks. There are plenty of instances where stock market crashes or major declines in asset pricescould lead to dramatic declines in one’s net worth almost overnight. In fact, the volatility of the market is leading many young investors to shy away from the markets.

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A 2024 Bank of America study found that 93% of rich young Americans say they plan to allocate more of their portfolio to alternatives in the next few years, and keep only 25% of their portfolio in traditional stocks (1).

So how do you balance liquidity and locked-in investments?

Take a look at Berkshire Hathaway (NYSE:BRK-B) co-founder Warren Buffett. Buffett’s cash pile reportedly sits at nearly $190 billion.

But this cash isn’t really cash — he’s holding most of his liquid assets in very short-term Treasury Bills and cash-like instruments. If you want to invest like the Oracle of Omaha, check out what the wealthiest among us are doing right now, and get some tips for your own accounts.

Save like the wealthy do

If your savings has been fully invested since fully invested since the 2008 Global Financial Crisis, you’re sitting pretty — an investor with only 10% or 20% of their portfolio sitting in cash, which continues to lose its value, would have built more wealth than a non-investor.

When hard times come, there’s value in not selling assets at a loss, and having the ability to load up on highly-depressed assets.

Recent data suggests High Net Worth Individuals (HNWIs), or those with more than $1 million in liquid assets, keep an average of just 15% of their wealth in cash and cash-like instruments. These can include treasury bonds, certificates of deposit (CDs) or money market funds. With these secure investments, HNWIs can ride the waves of the market. After all, market crashes are a certainty, but timing these events is near-impossible.

CDs can be great for investors who want to park their cash for periods of time, but there are often restrictions or penalties associated with withdrawing your money before the end of the term.

Read more: Warren Buffett used 8 solid, repeatable money rules to turn $9,800 into a $150B fortune. Start using them today to get rich (and stay rich)

If you need your money to be more liquid, but still want the interest benefits that CDs offer, consider a high-yield account.

The Wealthfront Cash Account can help you build an investment base through a combination of high-interest rates and ease of access.

A Wealthfront Cash Account can provide a base variable APY of 3.50%, but new clients can get a 0.65% boost over their first three months for a total APY of 4.15% provided by program banks on your uninvested cash. That’s over ten times the national deposit savings rate, according to the FDIC’s October report.

With no minimum balances or account fees, as well as 24/7 withdrawals and free domestic wire transfers, you can ensure your funds remain accessible at all times. Plus, Wealthfront Cash Account balances of up to $8 million are insured by the FDIC through program banks.

If you’re more interested in Exchange-Traded Funds (ETFs) and index funds, Acorns can help you squirrel away your spare change from everyday purchases into an investment opportunity.

Here’s how it works: Once you link your debit/credit cards, Acorns will automatically round up every purchase to the nearest dollar, and invest the difference into a diversified portfolio of ETFs tuned to your risk tolerance.

So, by the time you’ve sipped your $4.50 latte, you’ve invested 50 cents in your future.

The best part? You can get a $20 bonus investment when you sign up with a recurring monthly deposit.

Economic downturns are inevitable, and smart investors diversify their portfolio and keep their excess wealth in safe investments to ensure they can weather the storms. When a drawdown happens, having capital set aside is important. Stashing cash away in CDs, high-yield savings accounts, and money market funds are all great options for the more cautious investor.

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Bank of America Private Bank Study of Wealthy Americans (1)

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.