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Warren Buffett has never shied away from calling out underperforming investments. Among his most scathing critiques? An asset virtually everyone owns — cash.
In a 2008 op-ed for The New York Times, Buffett warned, “Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value.”
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Buffett had a point. Interest rates were low in 2008, so cash didn’t pay much. Meanwhile, inflation steadily eroded the purchasing power of money, diminishing cash’s real value over time.
Fast forward to today, and the story seems to have taken an unexpected turn. By the end of Q1 2025, Berkshire Hathaway’s cash reserves had swelled to a staggering $347.7 billion.
Why hold cash?
The sheer size of Buffett’s cash pile has raised eyebrows and fueled speculation about his strategy.
Edward Jones analyst Jim Shanahan told Reuters that the growing cash reserve “begs questions about whether Buffett thinks stocks are overvalued or an economic downturn is coming, or is trying to build cash for a big acquisition.” Similarly, CFRA Research analyst Cathy Seifert interpreted Berkshire’s cash hoarding as signaling a "risk-off" mindset, according to the report, which could lead investors to worry about its implications for the economy and markets.
Buffett himself has addressed concerns about his cash strategy, explaining his cautious approach during Berkshire’s annual shareholders meeting earlier this year.
“I don’t think anybody sitting at this table has any idea of how to use it effectively, and therefore we don’t use it,” he stated, emphasizing that “we only swing at pitches we like.”
Buffett has also voiced concerns about future complexities, noting, “As the world gets more sophisticated, complicated and intertwined, more can go wrong.” He added that the company aims to be prepared to “act when that happens.”
Putting cash to work
While Buffett is holding a massive cash pile, his warning about its drawbacks remains relevant. Inflation continues to chip away at the purchasing power of your hard-earned money. Putting your money to work not only helps you grow your wealth but also shields it from inflation’s long-term erosive effects.
Read more: How much cash do you plan to keep on hand after you retire? Here are 3 of the biggest reasons you’ll need a substantial stash of savings in retirement
Here are three popular ways to make your cash work harder to boost your net worth:
Stocks
As one of the most successful investors, Buffett built his fortune on investing in equities — particularly U.S. stocks. In his 2016 letter to shareholders, he expressed unwavering confidence in American businesses: “American business – and consequently a basket of stocks – is virtually certain to be worth far more in the years ahead.”
Berkshire’s performance serves as a powerful testament to that principle. From 1964 to 2023, the company delivered an astonishing overall gain of 4,384,748%.
Buffett emphasizes investing in businesses with durable competitive advantages — companies with unique strengths that allow them to outperform rivals over the long term. He also stresses the importance of understanding your investments. “Risk comes from not knowing what you’re doing,” he famously said. Doing your homework and focusing on industries and companies you understand is crucial for stock market success.
Today, there are more resources than ever to help investors make informed decisions. For instance, platforms like Moby, founded by former hedge fund analysts, offer stock research and insights tailored for everyday investors. Moby’s stock picks have outperformed the S&P 500 by an average of 11.95% over the past four years, helping over five million users identify promising investments before they take off.
Real estate
Real estate has long been considered a reliable hedge against inflation, thanks to its intrinsic value and income-generating potential.
When inflation rises, property values often increase as well, reflecting the higher costs of materials, labor and land. At the same time, rental income tends to go up, providing landlords with a revenue stream that adjusts for inflation. This combination makes real estate an attractive option for preserving and growing wealth during periods of escalating price levels.
In 2022, Buffett stated that if you offered him “1% of all the apartment houses in the country” for $25 billion, he would “write you a check.”
Whether the economy is booming or in a recession, people need a place to live. And with real estate prices rising to unaffordable levels in many parts of the country, renting has become the only option for many people.
These days, you don’t need to purchase a property outright to invest in real estate.
Crowdfunding platforms like Arrived have made it easier for average Americans to invest in rental properties without the need for a hefty down payment or the burden of property management.
With Arrived, you can invest in shares of rental homes with as little as $100, all without the hassle of mowing lawns, fixing leaky faucets or handling difficult tenants. Browse a curated selection of homes that have been vetted for their appreciation and income potential. Once you find a property you like, select the number of shares you’d like to purchase.
Before you invest, make sure you understand all the risks of real estate crowdfunding. Keep in mind, there’s no guarantee of receiving rental income deposits from your investment and your money will be locked up until the property is sold, so there’s no liquidity.
Gold
Gold is another popular hedge against inflation. The reason is straightforward: the yellow metal can’t be printed in unlimited quantities by central banks like fiat money. And because its value isn’t tied to any one currency or economy, gold could provide protection during periods of economic uncertainty. This unique characteristic has earned it the reputation of being a “safe haven” asset.
When inflation erodes the purchasing power of fiat currencies, gold’s appeal as a stable store of value often grows, driving up demand.
Investors have already taken note of its resilience. So far in 2024, gold prices have surged by 27%, surpassing $2,600 per ounce.
Economist Peter Schiff sees substantial further upside in investing in gold. “If gold can go from $20 an ounce to $2,600 an ounce, it can go from $2,600 to $26,000, or even to $100,000. There’s no limit because, again, gold isn’t changing — it’s the value of the dollar that’s decreasing,” he recently stated.
One way to invest in gold that also provides significant tax advantages is to open a gold IRA with the help of Thor Metals.
Gold IRAs allow investors to hold physical gold or gold-related assets within a retirement account, which combines the tax advantages of an IRA with the protective benefits of investing in gold, making it an attractive option for those looking to potentially hedge their retirement funds against economic uncertainties.
To learn more, you can get a free information guide that includes details on how to get up to $20,000 in free metals on qualifying purchases.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.