Dalio Warns Cash May Have 'Worst Return' Over Long Period

Bridgewater Associates founder Ray Dalio recently warned that holding cash in savings accounts and other short-term, interest-bearing vehicles can be a bad long-term investment. In an appearance on The Diary of a CEO podcast, Dalio stated that 'cash has the lowest return, guaranteed almost to have the worst return over the longer period of time.'

He explained that inflation will eat away at cash's purchasing power, and even earning interest may not be enough to keep pace with rising prices. According to Dalio, the advertised yield on an interest-bearing account does not tell the whole story: investors must also pay taxes on their earnings.

Dalio emphasized that this is especially true over long periods of time. He noted that $100 in 2026 would have the same purchasing power as just $11.74 did in 1970, citing data from the Federal Reserve Bank of Minneapolis. In contrast, gold has climbed 126% over the past five years.

Other assets, such as real estate, may also offer protection against inflation. However, Dalio stressed that a diversified portfolio is key to navigating market volatility.