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<title>The Navigator: The Cost of Cash</title>
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<!--[if !gte mso 9]><!----><span class="mcnPreviewText" style="display:none; font-size:0px; line-height:0px; max-height:0px; max-width:0px; opacity:0; overflow:hidden; visibility:hidden; mso-hide:all;">Most investors know that cash is “safe.” Not all investors realise that over longer periods, South African cash has delivered a low real return...</span><!--<![endif]-->
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<div style="display: none; max-height: 0px; overflow: hidden;">͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ </div><!--MCE_TRACKING_PIXEL-->
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</div></td></tr><tr><td style="padding-top:0;padding-bottom:0;padding-right:0;padding-left:0" valign="top" class="mceGutterContainer" id="gutterContainerId-8"><table border="0" cellpadding="0" cellspacing="0" width="100%" style="border-collapse:separate" role="presentation"><tbody><tr><td style="padding-top:0;padding-bottom:0;padding-right:0;padding-left:0;border:0;border-radius:0" valign="top" id="b8"><table width="100%" style="border:0;background-color:transparent;border-radius:0;border-collapse:separate"><tbody><tr><td style="padding-left:24px;padding-right:24px;padding-top:12px;padding-bottom:12px" class="mceTextBlockContainer"><div data-block-id="8" class="mceText" id="d8" style="width:100%"><p><br></p><h4><strong>Most investors know that cash is “safe.” Not all investors realise that over longer periods, South African cash has delivered a low real return for investors after inflation and taxes are stripped away. Safety, in this context, is a perception built on low volatility, while the inflation risk is not fully appreciated by investors.</strong></h4><p><span style="font-size: 14px"><span style="font-family: 'Lato', 'Helvetica Neue', Helvetica, Arial, sans-serif"><br></span><span style="font-family: Lato, "Helvetica Neue", Helvetica, Arial, sans-serif">This article argues that cash is not a low-risk asset in the financial planning world. Instead, the risk is simply deferred into the future and crystallised through opportunity cost in time. This means the long-term view of cash as an investment needs to be evaluated in context of its role and the long-term costs of holding it.</span></span></p><p><br></p><p><span style="font-size: 14px"><span style="font-family: Lato, "Helvetica Neue", Helvetica, Arial, sans-serif">A useful way to reframe this risk is to separate what investors can see from what they can’t. To illustrate this, the table below contrasts the trade-offs of cash against equities across five primary risk categories.</span></span></p><p><br></p><p class="last-child"><span style="font-size: 14px"><span style="font-family: Lato, "Helvetica Neue", Helvetica, Arial, sans-serif">The Risk of Cash vs Equities</span></span></p></div></td></tr></tbody></table></td></tr></tbody></table></td></tr><tr><td style="background-color:transparent;padding-top:12px;padding-bottom:12px;padding-right:24px;padding-left:24px;border:0;border-radius:0" valign="top" class="mceImageBlockContainer" align="center" id="b23"><div><!--[if !mso]><!--></div><table align="center" border="0" cellpadding="0" cellspacing="0" width="100%" style="border-collapse:separate;margin:0;vertical-align:top;max-width:100%;width:100%;height:auto" role="presentation" data-testid="image-23"><tbody><tr><td style="border:0;border-radius:0;margin:0" valign="top"><img alt="" src="https://mcusercontent.com/cdd951e6a7a08b835a0f38a3f/images/50ee3b34-cc56-f529-10a0-e16b1e51a9b7.png" width="612" height="auto" style="display:block;max-width:100%;height:auto;border-radius:0" class="imageDropZone mceImage" data-block-id="23"></td></tr></tbody></table><div><!--<![endif]--></div><div>
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<span class="mceImageBorder" style="border:0;border-width:2px;vertical-align:top;margin:0"><img role="presentation" class="imageDropZone mceImage" src="https://mcusercontent.com/cdd951e6a7a08b835a0f38a3f/images/50ee3b34-cc56-f529-10a0-e16b1e51a9b7.png" alt="" width="612" height="auto" style="display:block;max-width:612px;width:612px;height:auto"/></span>
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</div></td></tr><tr><td style="padding-top:0;padding-bottom:0;padding-right:0;padding-left:0" valign="top" class="mceGutterContainer" id="gutterContainerId-24"><table border="0" cellpadding="0" cellspacing="0" width="100%" style="border-collapse:separate" role="presentation"><tbody><tr><td style="padding-top:0;padding-bottom:0;padding-right:0;padding-left:0;border:0;border-radius:0" valign="top" id="b24"><table width="100%" style="border:0;background-color:transparent;border-radius:0;border-collapse:separate"><tbody><tr><td style="padding-left:24px;padding-right:24px;padding-top:12px;padding-bottom:12px" class="mceTextBlockContainer"><div data-block-id="24" class="mceText" id="d24" style="width:100%"><p>The key takeaway is that while cash successfully eliminates short-term visible volatility, it quietly locks in hidden risks like tax drag and inflation erosion that reduce real wealth over time.</p><p><br></p><h4>Cash Does Have a Legitimate Role</h4><p>None of this is an argument against holding cash. Cash serves genuine portfolio purposes as emergency reserves, funding for planned near-term expenditure and tactical flexibility. This isn’t an “anti-cash” stance; it’s an argument for intentionality. Investors should be highly deliberate about how cash is used within a portfolio and recognise how its use changes across different market environments, as the indirect costs of holding cash are high. Cash held for a defined purpose and a defined period is sensible portfolio management.</p><p><br></p><p>The distinction that matters most is the time horizon. The loss of purchasing power increases with how long cash sits idle. While the impact is negligible over three to twelve months against a known need, it compounds the longer cash sits without a determined exit strategy. The problem is cash held without a clear purpose. That deferred decision carries a real, compounding cost over time.</p><p><br></p><h4>Not All Cash Is the Same</h4><p>Bank deposits, money market funds, and income funds carry meaningfully different risk, return and liquidity profiles yet investors often treat them as interchangeable. The right vehicle depends on the purpose and time horizon of the investment. The table below reflects the relative difference between these vehicles.</p><p><br></p><p class="last-child">Relative Profiles of Different Cash Vehicles</p></div></td></tr></tbody></table></td></tr></tbody></table></td></tr></tbody></table></td></tr></tbody></table></td></tr></tbody></table></td></tr></tbody></table><!--[if (gte mso 9)|(IE)]></td></tr></table><![endif]--></td></tr></tbody><tbody data-block-id="21" class="mceWrapper"><tr><td style="background-color:transparent" valign="top" align="center" class="mceSection21"><!--[if (gte mso 9)|(IE)]><table align="center" border="0" cellspacing="0" cellpadding="0" width="660" style="width:660px;"><tr><td><![endif]--><table border="0" cellpadding="0" cellspacing="0" width="100%" style="max-width:660px" role="presentation"><tbody><tr><td style="background-color:#ffffff" valign="top" class="mceWrapperInner"><table align="center" border="0" cellpadding="0" cellspacing="0" width="100%" role="presentation" data-block-id="20"><tbody><tr class="mceRow"><td style="background-position:center;background-repeat:no-repeat;background-size:cover" valign="top"><table border="0" cellpadding="0" cellspacing="0" width="100%" role="presentation"><tbody><tr><td style="padding-top:0;padding-bottom:0" valign="top" class="mceColumn" id="mceColumnId--10" data-block-id="-10" colspan="12" width="100%"><table border="0" cellpadding="0" cellspacing="0" width="100%" role="presentation"><tbody><tr><td style="background-color:transparent;padding-top:12px;padding-bottom:12px;padding-right:24px;padding-left:24px;border:0;border-radius:0" valign="top" class="mceImageBlockContainer" align="center" id="b25"><div><!--[if !mso]><!--></div><table align="center" border="0" cellpadding="0" cellspacing="0" width="100%" style="border-collapse:separate;margin:0;vertical-align:top;max-width:100%;width:100%;height:auto" role="presentation" data-testid="image-25"><tbody><tr><td style="border:0;border-radius:0;margin:0" valign="top"><img alt="" src="https://mcusercontent.com/cdd951e6a7a08b835a0f38a3f/images/7c241688-5f99-bbb7-0805-d9a03b1e57b9.png" width="612" height="auto" style="display:block;max-width:100%;height:auto;border-radius:0" class="imageDropZone mceImage" data-block-id="25"></td></tr></tbody></table><div><!--<![endif]--></div><div>
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</div></td></tr><tr><td style="padding-top:0;padding-bottom:0;padding-right:0;padding-left:0" valign="top" class="mceGutterContainer" id="gutterContainerId-26"><table border="0" cellpadding="0" cellspacing="0" width="100%" style="border-collapse:separate" role="presentation"><tbody><tr><td style="padding-top:0;padding-bottom:0;padding-right:0;padding-left:0;border:0;border-radius:0" valign="top" id="b26"><table width="100%" style="border:0;background-color:transparent;border-radius:0;border-collapse:separate"><tbody><tr><td style="padding-left:24px;padding-right:24px;padding-top:12px;padding-bottom:12px" class="mceTextBlockContainer"><div data-block-id="26" class="mceText" id="d26" style="width:100%"><p class="last-child">Treating these different options as identical can lead to costly mistakes over time, such as sacrificing yield on long-term reserves by leaving them in a bank account. A better approach is intentionally matching the specific purpose of your cash to the exact vehicle designed to hold it.</p></div></td></tr></tbody></table></td></tr></tbody></table></td></tr><tr><td style="background-color:#f4f4f4;padding-top:8px;padding-bottom:8px;padding-right:8px;padding-left:8px;border:0;border-radius:0" valign="top" class="mceLayoutContainer" id="b19"><table align="center" border="0" cellpadding="0" cellspacing="0" width="100%" role="presentation" data-block-id="19" id="section_31061dd7080e969bd68600a9b2450ed1" class="mceFooterSection"><tbody><tr class="mceRow"><td style="background-position:center;background-repeat:no-repeat;background-size:cover" valign="top"><table border="0" cellpadding="0" cellspacing="0" width="100%" role="presentation"><tbody><tr><td valign="top" class="mceColumn" id="mceColumnId--9" data-block-id="-9" colspan="12" width="100%"><table border="0" cellpadding="0" cellspacing="0" width="100%" role="presentation"><tbody><tr><td style="border:0;border-radius:0" valign="top" align="center" id="b-6"><table align="center" border="0" cellpadding="0" cellspacing="0" width="100%" role="presentation" data-block-id="-6"><tbody><tr class="mceRow"><td style="background-position:center;background-repeat:no-repeat;background-size:cover;padding-top:0px;padding-bottom:0px" valign="top"><table border="0" cellpadding="0" cellspacing="24" width="100%" style="table-layout:fixed" role="presentation"><colgroup><col span="1" width="8.333333333333332%"><col span="1" width="8.333333333333332%"><col span="1" width="8.333333333333332%"><col span="1" width="8.333333333333332%"><col span="1" width="8.333333333333332%"><col span="1" width="8.333333333333332%"><col span="1" width="8.333333333333332%"><col span="1" width="8.333333333333332%"><col span="1" width="8.333333333333332%"><col span="1" width="8.333333333333332%"><col span="1" width="8.333333333333332%"><col span="1" width="8.333333333333332%"></colgroup><tbody><tr><td style="padding-top:0;padding-bottom:0" valign="top" class="mceColumn" id="mceColumnId--2" data-block-id="-2" colspan="6" width="50%"><table border="0" cellpadding="0" cellspacing="0" width="100%" role="presentation"><tbody><tr><td style="padding-top:0;padding-bottom:0;padding-right:0;padding-left:0" valign="top" class="mceGutterContainer" id="gutterContainerId-17"><table border="0" cellpadding="0" cellspacing="0" width="100%" style="border-collapse:separate" role="presentation"><tbody><tr><td style="padding-top:0;padding-bottom:0;padding-right:0;padding-left:0;border:0;border-radius:0" valign="top" id="b17"><table width="100%" style="border:0;background-color:transparent;border-radius:0;border-collapse:separate"><tbody><tr><td style="padding-left:16px;padding-right:16px;padding-top:12px;padding-bottom:12px" class="mceTextBlockContainer"><div data-block-id="17" class="mceText" id="d17" style="width:100%"><p style="text-align: left;" class="last-child"><a href="https://mailchi.mp/a9107ef1b792/the-navigator-there-is-always-the-next-big-thing-17459400?e=[UNIQID]"><span style="font-size: 11px">View email in browser</span></a><span style="font-size: 11px"><br>Steward Capital (Pty) Ltd. · 1 Nollsworth Park, Nollsworth Crescent · La Lucia Ridge · Durban, KwaZulu-Natal 4051 · South Africa<br></span><a href="https://stewardcapital.us19.list-manage.com/profile?u=cdd951e6a7a08b835a0f38a3f&id=e7c35e7601&e=[UNIQID]&c=115f4bc5bd"><span style="font-size: 11px">update your preferences</span></a><span style="font-size: 11px"> or </span><a href="https://stewardcapital.us19.list-manage.com/unsubscribe?u=cdd951e6a7a08b835a0f38a3f&id=e7c35e7601&t=b&e=[UNIQID]&c=115f4bc5bd"><span style="font-size: 11px">unsubscribe</span></a></p></div></td></tr></tbody></table></td></tr></tbody></table></td></tr></tbody></table></td><td style="padding-top:0;padding-bottom:0" valign="top" class="mceColumn" id="mceColumnId--3" data-block-id="-3" colspan="6" width="50%"><table border="0" cellpadding="0" cellspacing="0" width="100%" role="presentation"><tbody><tr><td style="background-color:transparent;padding-top:12px;padding-bottom:12px;padding-right:48px;padding-left:48px;border:0;border-radius:0" valign="top" class="mceImageBlockContainer" align="left" id="b16"><div><!--[if !mso]><!--></div><a href="https://www.stewardcapital.co.za" style="display:block" target="_blank" data-block-id="16"><table align="left" border="0" cellpadding="0" cellspacing="0" width="100%" style="border-collapse:separate;margin:0;vertical-align:top;max-width:198.9px;width:100%;height:auto" role="presentation" data-testid="image-16"><tbody><tr><td style="border:0;border-radius:0;margin:0" valign="top"><img alt="logo" src="https://mcusercontent.com/cdd951e6a7a08b835a0f38a3f/images/e5a2bac3-cf59-a62d-af80-a6bfe7c72ee6.png" width="198.9" height="auto" style="display:block;max-width:100%;height:auto;border-radius:0" class="mceLogo"></td></tr></tbody></table></a><div><!--<![endif]--></div><div>
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