Pure Benchmarks · Free calculator

Cash Drag Calculator

Updated November 3, 2026

Short answer

Cash drag is the growth you give up by holding cash instead of investing it. $50,000 earning 4% for 10 years grows to about $74,000; at a steady 7% it would grow to about $98,400, a gap of roughly $24,300, or $1,500 in the first year alone. Enter your own amount, rates and years below.

What is your cash costing you?

Cash on the sidelines ($) Years it stays in cash Interest the cash earns (% a year) Return if invested (% a year)

Kept in cash

$74,012

after 10 years

If invested

$98,358

at a steady 7% a year

Cash drag

$24,345

$1,500 in the first year

Assumes a steady return every year. Real markets move up and down, so the invested path would have swings the cash path does not.

Money waiting on the sidelines feels safe, and some of it should be, for emergencies and near-term spending. Beyond that, cash has a cost that never appears on a statement: the growth it would have earned invested. This calculator puts a dollar figure on it for the amount, interest rate and time frame you choose. It runs in your browser and nothing you enter is stored.

Link your portfolio and see, in dollars, what your own holdings would have done if you had held through past crashes instead of selling. Every sale and re-entry after that is scored against staying invested.

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How the calculation works

Both paths start with the same amount. The cash path grows at the interest rate you enter, and the invested path grows at the return you enter, each compounding once a year. The difference between the two ending values is the cash drag.

Cash is not free even when rates are high

A savings or money market rate of 4% or 5% narrows the gap but rarely closes it over long periods, because stocks have historically returned more over decades. When rates fall, the drag grows. The trade-off is that invested money moves up and down along the way, which cash does not.

Cash you need versus cash you are avoiding

An emergency fund and money you will spend in the next few years belong in cash. Cash drag matters most for money that is meant for the long term but is sitting out because the market feels risky, which is often the money that misses recoveries.

Seeing it in your own account

Pure Benchmarks, our own product, measures how much of a connected portfolio sits in cash and scores each move into and out of cash against the portfolio you would have had without it.

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Frequently asked questions

What is cash drag?

Cash drag is the return you give up by holding cash instead of investing it. It is the gap between what the money earns as cash and what it would have earned invested.

How much does holding cash cost?

It depends on the amount, the rates and the time. As an example, $50,000 at 4% instead of a steady 7% for 10 years leaves about $24,300 behind.

Is holding cash ever the right choice?

Yes, for emergencies and money you will need soon. This page is information about the cost of cash, not a recommendation about how much any investor should hold.

Does the calculator include inflation?

No. Both paths are in today’s dollars before inflation. Inflation lowers the real value of both, and cash earning less than inflation loses buying power each year.

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This page is an information baseline for comparison only. It is not investment advice and not a recommendation to buy, sell, replace, or transfer any specific asset, account, or firm. Past performance does not guarantee future results. All figures shown are illustrative.