The rush to high yield cash-like investments, and why that is dangerous

The rush to high yield cash-like investments, and why that is dangerous
Cash-like investments are offering their highest rates since 2001.
While the official metrics of inflation appear lower than the yields on cash-like investments, I believe the actual rate of inflation that the ordinary American is facing exceeds 5%. These investments will almost certainly trail inflation.
Inflation is 3%, core inflation is 4.1%, and CDs are paying 5%. Sure, you are beating inflation as measured by these metrics, but are your actual costs only up 4.1% year over year? I do not think the measures of inflation correctly reflect what the average American is spending their money on.
Any money not needed in the next ten years should be in the stock market. Fixed income investments will not grow sufficiently and will lose out to inflation.
Cash is only one part of a well diversified portfolio. The younger you are, the more stocks you should be in.
The article features a 25 year old insurance analyst who has more than a quarter of his portfolio into treasury bills, money market funds, and a high yield savings account. This young man has three decades of working life to go before retirement. Why is he wasting time and market returns in low risk, low reward cash like instruments? It is really quite ridiculous if you ask me. People in their 20s should not be parking money in treasuries, CDs, and savings account.
In contrast, the article features an 84 year old retiree who is half in the stock market and half in T-bills. While this is probably pretty aggressive, I think this is less reckless than the 25 year old. Now that is a controversial statement right there. The young man is adding more time he will have to work before he can retire.
The article also mentions a 44 year old strategic communication consultant. She loft thousands of dollars in GameStop shares so now she buys treasury bills. This is absolutely a double whammy mistake. Just because you got burned buying meme stocks, does not mean you go to treasury bills. The lesson she should have learned should have been to buy index funds like the S&P 500.
The whole article is absolutely ridiculous. While safe, cash like investments like treasury bills and high yield savings accounts seem great, you are sacrificing the high returns of the stock market. The younger you are, the farther you are setting yourself back financially. The praise and adulation of cash like investments by the Wall Street Journal is not only reckless, but dangerous, especially to younger readers.
Works Cited:
https://www.wsj.com/articles/everyday-investors-are-thriving-in-a-world-awash-in-yield-2a715361?mod=Searchresults_pos7&page=1
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