Captain’s Log

The Loss of Purchasing Power on Excess Cash, CDs, and Money Market Holdings: A Look Back at 2020–2024

I remain fascinated—not by clients’ and prospects’ decisions to hold excess cash beyond their emergency funds and upcoming large purchases—but by the reasons behind them. Often, it’s due to fear of losing principal, the safety of FDIC insurance, or satisfaction with the yield from a CD or money market account.

Intuitively, most people know this isn’t the best long-term decision. But emotionally, it feels safe and comfortable. That got me thinking—what do the numbers actually tell us? To answer that, I looked at data over the last five years (2020–2024) and compared three different sets of information:

Cost of Living Adjustment (COLA):

An increase in wages, benefits, or pensions designed to offset inflation and preserve purchasing power. COLAs are tied to the Consumer Price Index (CPI) and help people maintain their quality of life. Social Security payments, for example, are adjusted annually based on COLA.

Money Market Account:

Specifically, I’ve had a money market account with Ally for years, so I used the year-end yields from that account for each year in the study.

S&P 500 Index:

A benchmark of the stock performance of 500 leading U.S. companies.

The Results

Over the five-year period:

• Average COLA: 4.32%
• Average Ally Money Market Yield: 2.43%
• Average S&P 500 Return: 14.25%

Now, let’s say a 60-year-old couple had $1,000,000 to invest on January 1, 2020. How would things have played out if they invested in the S&P 500 versus leaving the money in a money market account?

We’ll use net returns, which adjust for the impact of inflation (via COLA):

• Money Market Net Return: 2.43% (yield) – 4.32% (COLA) = -1.89%
• S&P 500 Net Return: 14.25% (return) – 4.32% (COLA) = +9.93%

Purchasing Power Outcomes (2020–2024)

• $1,000,000 in the S&P 500 (inflation-adjusted): Grows to $1,464,000
  $1,000,000 in Ally Money Market (inflation-adjusted): Decreases to $922,368

By the end of 2024, this couple is now 65 and ready to retire. How does this decision impact their income over the next 20 years?

• 5% withdrawal from $1,464,000 = $73,205/year
• 5% withdrawal from $922,368 = $46,118/year
• Annual difference: $27,087

Over 20 years, the total difference in retirement income is $541,732 —just from the decision to hold excess cash in a money market account rather than investing it.

This example is a powerful reminder that while we can’t predict future market returns or Inflation, we do know that as inflation and COLA rises, it is most often in proportion to safe-feeling yields on bank accounts or CDs and rarely keep pace or just break even.

The key is to maintain a proper emergency fund, cover large expected expenses over the following 12 months, and then make sure your remaining cash is
working for your future. Start by investing in tax-advantaged accounts, and then allocate to taxable investment accounts as
appropriate.

If you’re unsure how to balance safety and growth, call your Anchor Wealth advisor. We’ll help you make sure your cash is aligned with your retirement goals—and growing in a way that protects your future purchasing power.

Adam Ludwig, CEO/Wealth Advisor

How to Claim Social Security Wisely

When it comes to retirement, Social Security is one of the biggest pieces of the puzzle—but it’s also one of the most misunderstood. You’ve likely heard a mix of advice from friends, family, or headlines: “Claim as early as you can,” “Wait until you’re 70,” “Take the money before it runs out.” With so many voices chiming in, it’s easy to feel overwhelmed or rushed into a decision. But here’s the truth: claiming Social Security isn’t about following what others are doing, it’s
about following your plan. CLICK HERE to finish reading Dan Leonard’s blog for June.

The AWM Team’s June Adventures

Chris Perry and his son Preston took a boys’ trip to West Virginia. Chris and Preston went white water rafting, checked out some caves, and went to the
US Air Force Museum.

Antoinette Fisher and her daughters Audrey and Natalie traveled to South Dakota for USTA Nationals, where Audrey took First place in Double Mini!
Congratulations Audrey. They visited Mount Rushmore when away from the arena, and Natalie celebrated her 11th birthday while on the trip.

Chris DeSchepper and her entire family spent a week at her favorite place on earth…Disney World. Chris and her family were celebrating her daughter Kiley’s graduation from college!

Adam’s Nightstand

I recently started reading The 7 Commitments of a Great Team by Jon Gordon. True to his style, the book is written as a fable—using storytelling to drive home powerful lessons on what it takes to build a truly great team.

Jon Gordon is no stranger to leadership and team culture. He’s a 17-time best-selling author, a top leadership speaker, and the go-to consultant for elite CEOs, championship coaches, and high-performing teams in the NFL, NBA, and MLB.

Whether you’re a business leader, coach, entrepreneur, or team member, this book offers practical and inspiring insights that will challenge you to lead with purpose and leave a lasting impact on the people around you.

The big question at the heart of the book is simple: What separates great teams from the rest? Jon’s answer: commitment.

He outlines seven key commitments that every great team must make to build trust, deepen connection, overcome adversity, and achieve extraordinary results together:

• The 7 commitments every team needs
• The secret to building unshakable trust
• Why positivity is a competitive advantage
• The best way to hold your team accountable
• The formula for giving your best
• How to turn challenges and change into growth
• The mindset shift that leads to long-term success

If you’re leading a team—or part of one—this book is well worth your time. I’m looking forward to applying these insights with our team and continuing to build something great together.

Would you like to read this book? You can find it on Amazon.