Ray Dalio warns this major asset will have the ‘worst return’ guaranteed — and you probably own a lot of it
Jing Pan
10 min read
YouTube/ The Diary of a CEO
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Americans often turn to one particular asset when they want security, stability and protection from market volatility. But billionaire investor Ray Dalio says that sense of safety may be dangerously misleading.
The asset is cash — including money held in savings accounts and other short-term, interest-bearing vehicles.
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During a recent appearance on The Diary of a CEO podcast (1), Dalio called cash the “worst” long-term investment.
“People think that that’s the safest. It’s not,” the Bridgewater Associates founder said. “It’s the worst investment over a long period of time because inflation will eat it away.”
Dalio clarified that he was not talking only about physical bills sitting in a drawer. His definition included cash held “in whatever form — a money market fund, whatever it is that is that short-term, ‘I’ll deposit it and it’ll give me an interest rate.'”
Earning interest is certainly better than letting physical cash sit idle. But Dalio does not believe it is enough — far from it.
Cash “has the lowest return, guaranteed almost to have the worst return over the longer period of time,” he said bluntly.
When host Steven Bartlett noted that people keep cash because it feels safer, Dalio responded: “That’s right. And I’m saying it’s not safer because of inflation.”
Protect your wealth from inflation’s bite
Dalio’s warning ultimately comes down to purchasing power — or how much your money can actually buy.
He explained that if his cash earned no interest, he would simply “lose to the inflation rate,” which he estimated was running at roughly 3.5% to 4%.
Dalio’s best guess closely reflects the latest official reading. The U.S. Consumer Price Index rose 3.5% between June 2025 and June 2026, according to the Bureau of Labor Statistics (2).
An interest-bearing account can offset some of that damage. But Dalio noted that the advertised yield does not tell the whole story.
“Now I’ll get an interest rate on it if I put it someplace, and it’ll give me maybe an interest rate that’s somewhere in that vicinity, similar to that — and then I have to pay taxes on it,” he said.
“Even though you really didn’t gain relative to inflation, you still have to pay the taxes on whatever you’ve earned. Anyway, over the long term, it’s a lousy return”
In other words, even when your cash earns interest, that income may be taxable — and the amount left over may still be insufficient to keep pace with rising prices.
And while annual inflation of 3.5% may not sound catastrophic, its effects compound dramatically over decades. According to the Federal Reserve Bank of Minneapolis (3), $100 in 2026 has the same purchasing power as just $11.74 did in 1970.
That’s right. $100 became less than $12.
That’s why many Americans are looking beyond cash and traditional savings when thinking about how to protect their purchasing power.
One time-tested option is gold. Its appeal is simple: unlike fiat currencies, the yellow metal can’t be printed at will by central banks.
Gold is also considered the ultimate safe haven. It’s not tied to any one country, currency or economy, and in times of economic turmoil or geopolitical uncertainty, investors often flock to it — driving prices higher.
Dalio himself has repeatedly emphasized gold’s role in building a resilient portfolio.
Last year, he told CNBC that “People don’t have, typically, an adequate amount of gold in their portfolio,” adding, “When bad times come, gold is a very effective diversifier.”
Over the past five years, as inflation continued to chip away at the purchasing power of the dollar, gold has climbed 126%.
Other prominent voices see further potential. JPMorgan CEO Jamie Dimon has said that in this environment, gold can “easily” rise to $10,000 an ounce.
One way to invest in gold that can also provide significant tax advantages is to open a gold IRA with the help of Goldco.
Gold IRAs allow investors to hold physical gold or gold-related assets within a retirement account, thereby combining the tax advantages of an IRA with the protective benefits of investing in gold, making it a compelling potential option for those wanting to ensure their retirement funds are diversified during rough economic times.
If you’re curious whether this is the right investment to diversify your portfolio, you can download your free gold and silver information guide today. Just keep in mind that gold is often best deployed as one part of an otherwise well-diversified portfolio — not a wholesale replacement.
Gold isn’t the only asset investors turn to during inflationary times. Real estate has also proven to be a powerful hedge.
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.
Over the past ten years, the S&P Cotality Case-Shiller U.S. National Home Price NSA Index (4) has jumped by 87%, reflecting strong demand and limited housing supply.
Of course, high home prices can make buying a home more challenging, especially with mortgage rates still elevated. And being a landlord isn’t exactly hands-off work — managing tenants, maintenance and repairs can quickly eat into your time (and returns).
The good news? You don’t need to buy a property outright — or deal with leaky faucets — to invest in real estate today. Crowdfunding platforms like mogul offer an easier way to get exposure to this income-generating asset class.
As a real estate investment platform offering fractional ownership in blue-chip rental properties, mogul gives investors monthly rental income, real-time appreciation and tax benefits — without the need for a hefty down payment or 3 a.m. tenant calls.
Each property undergoes a rigorous vetting process, requiring a minimum 12% return even in downside scenarios. Across the board, the platform features an average annual IRR of 18.8%. Offerings often sell out in under three hours, with investments typically ranging between $15,000 and $40,000 per property.
Another option is Lightstone DIRECT, which gives accredited investors access to single-asset multifamily and industrial deals.
Lightstone DIRECT’s direct-to-investor model ensures a high degree of alignment between individual investors and a vertically-integrated, institutional owner-operator — a sophisticated and streamlined option for individual investors looking to diversify into private-market real estate.
Prominent investors like Dalio often stress the importance of diversification — and for good reason. Many traditional assets tend to move in tandem, especially during periods of market stress.
That message feels especially relevant today. Nearly 40% of the S&P 500’s weight is concentrated in its ten largest stocks, and the index’s CAPE ratio hasn’t been this high since the dot-com boom.
This is where, for many investors, alternative assets come into play. These can include everything from real estate and precious metals to private equity and collectibles.
But there’s one store of value that routinely flies under the radar: It’s scarce by design, coveted worldwide and frequently locked away by institutions.
We’re talking about post-war and contemporary art — a category that has outpaced the S&P 500 with low correlation since 1995.
It’s easy to see why art pieces often fetch new highs at auctions: The supply of the best works of art is limited, and many of the most desirable pieces have already been snatched up by museums and collectors. That scarcity can also make art an attractive option for investors looking to diversify and preserve wealth during periods of high inflation.
Until recently, purchasing art has been a domain reserved for the ultra-wealthy — like in 2022 when a collection of art owned by the late Microsoft co-founder Paul Allen sold for $1.5 billion at Christie’s New York (5), making it the most valuable collection in auction history.
Now, Masterworks — a platform for investing in shares of blue-chip artwork by renowned artists, including Pablo Picasso, Jean-Michel Basquiat and Banksy — can help you get started with this asset class. It’s easy to use and, with 31 successful exits to date, Masterworks has distributed more than $65 million in total proceeds (including principal).
Note that past performance is not indicative of future returns and investing involves risk. See Reg A disclosures at http://masterworks.com/cd.
Is too much of your portfolio sitting in cash?
At the end of the day, everyone’s financial situation is different. Income, investment goals, debt obligations, time horizon and risk tolerance can all shape how much cash it makes sense to hold.
Cash may lose purchasing power to inflation, but it can still serve important purposes — whether you are saving for a major purchase, waiting for an investment opportunity or keeping a liquid cushion for emergencies.
That makes the decision more nuanced than simply moving every spare dollar out of cash. The real question is whether your overall asset allocation matches your goals and obligations.
If you have a portfolio of $250,000 or more, platforms like WiserAdvisor can connect you with vetted professionals who specialize in this kind of planning.
Simply answer a few questions about your savings, retirement timeline and overall investment portfolio.
From there, WiserAdvisor reviews its network to match you — for free — with up to three vetted, reputable advisors aligned with your specific needs.
WiserAdvisor is a matching service and does not provide financial advice directly. All matched advisors are third parties, and specific financial results are not guaranteed.
