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Overcoming The Fear of Losing Money

     J.P. Morgan Publishes a quarterly Guide to the Markets that contains dozens of charts on the state of the economy and investing. Among the charts is one that details the amount of money held in retail savings accounts and money market funds and the income generated by $100,000 invested in a 6-month CD.  As of the end of the 3rd quarter of 2016 that number was more than twelve trillion dollars. That adds up to 69.4% of M2 money supply as a percentage of GDP and the income generated on $100,000 was $370.
     Why are so many people choosing the option that gets them so little in return? My guess is that the fear of losing money is greater than all of the other negatives of holding cash and the potential benefits of other investments just aren’t enough to get people off the sideline.  Added to that is my observation that many view investing as an all or nothing game.  To some, investing is a choice between being either “in” or “out” of “the market” whatever that is.
     Unfortunately, there is a hidden cost to holding cash.  For the last seven years, the income generated from cash has failed to beat inflation which means that the value of your money, in terms of purchasing power, is less and less as time goes on.  It doesn’t have to be that way.

About LPL Financial
LPL Financial (Nasdaq: LPLA) was founded on the principle that the firm should work for the advisor, and not the other way around. Today, LPL is a leader in the markets we serve,* supporting nearly 20,000 financial advisors, and approximately 800 institution based investment programs and 500 independent RIA firms nationwide. We are steadfast in our commitment to the advisor-centered model and the belief that Americans deserve access to personalized guidance from a financial advisor. At LPL, independence means that advisors have the freedom they deserve to choose the business model, services, and technology resources that allow them to run their perfect practice. And they have the freedom to manage their client relationships, because they know their clients best. Simply put, we take care of our advisors, so they can take care of their clients

*Top RIA custodian (Cerulli Associates, 2020 U.S. RIA Marketplace Report); No. 1 Independent Broker-Dealer in the U.S (Based on total revenues, Financial Planning magazine 1996-2021); No. 1 provider of third-party brokerage services to banks and credit unions (2020-2021 Kehrer Bielan Research & Consulting Annual TPM Report); Fortune 400 Company as of June 2021. LPL and its affiliated companies provide financial services only from the United States.

Jones & Company and LPL Financial are separate companies.

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