From 2010 through 2022, money in the SPDR Bloomberg 1-3 Month T-Bill ETF (BIL), a fund holding 1-3 month Treasury bills, lost purchasing power in every single calendar year. Interest kept arriving, but prices rose faster, so the same balance bought a little less each December. That long stretch gave the zero-rate years an old market saying: "cash is trash."
The numbers look different now. On November 6, 2026 the 3-month Treasury bill yielded 4.19%, while headline consumer prices rose 3.7% in the 12 months to September 2026. The real yield on cash is positive again for money in Treasury bills, yet it is not one number: it depends on where the cash sits and on which inflation measure sets the yardstick.
The bond side of the same rate backdrop, including duration and longer-term real yields, has its own companion guide on three levers for investing in a high interest rate environment. Cash is the other half of that story: what it earns, where it earns it, and what it gives up.
Key Takeaways
- The SPDR Bloomberg 1-3 Month T-Bill ETF (BIL) had a negative real return in every calendar year from 2010 through 2022. 2023, 2024 and 2025 were the first three calendar years since at least 2010 with a positive real return.
- On November 6, 2026 the 3-month Treasury yield of 4.19% sat about 0.49 point above headline CPI of 3.7%, 1.59 points above core CPI and 1.96 points above 10-year breakeven inflation.
- The FDIC national average savings rate for October 2026 was 0.38%, about 3.32 points below headline CPI. The single label "cash" covers very different real outcomes.
- Opportunity cost runs both ways. In 2022 the T-bill fund returned +1.40% while the SPDR S&P 500 ETF Trust (SPY) fell 18.18%; in 2023, 2024 and 2025 the S&P 500 fund outpaced cash every year.
- Money market fund assets reached $8.44 trillion at the end of the second quarter of 2026, up 62% from the end of 2021.
Why Cash Was Called Trash, 2010-2021
The saying came from a simple gap. For most of the 2010s, short-term Treasury yields sat close to zero while consumer prices kept rising every year. Cash rarely shrank in dollar terms; it shrank in what those dollars could buy.
The measure that captures this is the real return: a nominal return adjusted for inflation, calculated as (1 + nominal return) / (1 + inflation) - 1. In 2021, for example, the T-bill fund returned -0.10% while CPI rose 7.04%, a real return of -6.67%.
Cash in the Zero-Rate Years, by Period
The table groups the years into three periods. The average 3-month yield is the average of daily constant-maturity yields. The cash and CPI figures are compound annual rates, and CPI is measured December to December, not seasonally adjusted.
| Period | Average 3-month Treasury yield (%) | T-bill fund (BIL), per year (%) | CPI inflation per year (%) | Real return of cash per year (%) |
|---|---|---|---|---|
| 2010-2019 | 0.58 | 0.41 | 1.75 | -1.32 |
| 2020-2021 | 0.20 | 0.15 | 4.16 | -3.85 |
| 2022-2025 | 4.19 | 3.91 | 3.83 | +0.08 |
Across 2010-2019, the T-bill fund returned 0.41% a year against inflation of 1.75%, a real return of -1.32% a year. In 2020-2021 the gap widened to -3.85% a year, as the 3-month yield averaged 0.20% and inflation picked up to 4.16% a year.
The 2022-2025 row shows the turn, and also how narrow it was. A 3.91% annual return against 3.83% inflation left a real return of +0.08% a year. The 4.19% average 3-month yield for 2022-2025 happens to match the November 6, 2026 3-month yield; they are two separate measurements.
Year by Year, 2019-2025
| Year | Average 3-month Treasury yield (%) | T-bill fund (BIL) return (%) | CPI inflation Dec to Dec (%) | Real return of the T-bill fund (%) |
|---|---|---|---|---|
| 2019 | 2.11 | 2.03 | 2.29 | -0.25 |
| 2020 | 0.36 | 0.40 | 1.36 | -0.95 |
| 2021 | 0.04 | -0.10 | 7.04 | -6.67 |
| 2022 | 2.09 | 1.40 | 6.45 | -4.74 |
| 2023 | 5.28 | 4.94 | 3.35 | +1.54 |
| 2024 | 5.18 | 5.19 | 2.89 | +2.24 |
| 2025 | 4.21 | 4.15 | 2.68 | +1.43 |
2022 shows the trap. Short-term yields rose during the year, but inflation of 6.45% outran a 1.40% return, leaving a real return of -4.74%. Rising rates on their own did not restore purchasing power; rates had to sit above inflation.
Then 2023, 2024 and 2025 brought real returns of +1.54%, +2.24% and +1.43%. These were the first three calendar years since at least 2010 in which the T-bill fund returned more than inflation. Every calendar year from 2010 through 2022 had been negative.
What Cash Earns Now, Before and After Inflation
The real yield on cash starts with two inputs: what a cash vehicle pays, and how fast prices are rising. The table below lists both, using Treasury rates for November 6, 2026, FDIC national rates for October 2026 and CPI for the 12 months to September 2026.
| Rate or inflation yardstick | Level (%) | Date or period |
|---|---|---|
| 3-month Treasury bill, par yield | 4.19 | Nov 6, 2026 |
| 52-week Treasury bill, coupon-equivalent yield | 4.32 | Nov 6, 2026 |
| Overnight reverse repurchase (ON RRP) award rate | 3.75 | Nov 6, 2026 |
| Federal funds target range | 3.75-4.00 | Held Oct 28, 2026 |
| FDIC national average, savings | 0.38 | October 2026 |
| FDIC national average, money market deposit account | 0.63 | October 2026 |
| FDIC national average, 12-month CD | 1.76 | October 2026 |
| FDIC national average, 60-month CD | 1.41 | October 2026 |
| CPI-U, headline | 3.7 | 12 months to Sep 2026 |
| CPI-U, core (excludes food and energy) | 2.6 | 12 months to Sep 2026 |
| 10-year Treasury, nominal par yield | 4.86 | Nov 6, 2026 |
| 10-year TIPS real yield | 2.63 | Nov 6, 2026 |
| 10-year breakeven inflation | 2.23 | Nov 6, 2026 |
Several terms in that table need a plain definition:
- Par yield is the yield the Treasury publishes on its daily curve for a security priced at face value.
- Coupon-equivalent yield restates a Treasury bill's discount as an annual yield that can be compared with a bond paying regular interest.
- The ON RRP rate is the rate the Fed pays eligible counterparties, including money market funds, on overnight reverse repurchase agreements.
- The FDIC national average rate is the FDIC's average of rates offered by insured institutions, not the rate any one bank pays.
- Breakeven inflation is the 10-year nominal Treasury yield minus the 10-year Treasury Inflation-Protected Securities (TIPS) real yield: 4.86% minus 2.63%, or 2.23%.
Real Yield on a 3-Month Treasury Bill, Three Yardsticks
The table below uses simple subtraction, so each figure is approximate. The historical real returns in the earlier tables use the (1 + nominal) / (1 + inflation) - 1 formula, which gives slightly different results from the same inputs.
| Comparison | Nominal rate (%) | Inflation yardstick (%) | Real yield (points) |
|---|---|---|---|
| 3-month Treasury bill vs headline CPI | 4.19 | 3.7 | +0.49 |
| 3-month Treasury bill vs core CPI | 4.19 | 2.6 | +1.59 |
| 3-month Treasury bill vs 10-year breakeven | 4.19 | 2.23 | +1.96 |
| National average savings vs headline CPI | 0.38 | 3.7 | -3.32 |
Why the Inflation Measure Changes the Answer
Against headline CPI, the 3-month bill keeps about half a point of real yield. Against core CPI the margin is +1.59 points, and against the 10-year breakeven it is +1.96 points. The national average savings rate, by contrast, sits 3.32 points below headline CPI.
Each yardstick measures something different:
- Headline CPI covers the full consumer basket, including food and energy, so it moves with grocery and fuel prices.
- Core CPI excludes food and energy, two of the most volatile categories.
- Breakeven inflation is a market-implied rate drawn from Treasury bond prices. It is not a forecast of what inflation will be.
The sign and size of "real" therefore depend on the ruler. A household whose budget leans heavily on food, fuel and utilities may find headline CPI closer to its own experience than core CPI.
The Same Dollar, Very Different Yields: Where Cash Sits
In November 2026 the word "cash" covers a wide range of rates. A 3-month Treasury bill paid 4.19% and a 52-week bill 4.32%, while the FDIC national average was 0.38% for savings and 0.63% for money market deposit accounts.
The gap comes from mechanics, not from the label. National averages blend thousands of institutions, and individual banks pay rates above and below them. The way rates vary across savings products has its own explainer on how high-yield savings accounts work.
The clearest way to see the spread is one year of the same balance in four places.
One year of $10,000 in cash, before and after 3.7% inflation
Hypothetical: $10,000 kept for one year at each rate, with inflation assumed equal to the 3.7% CPI rate of the 12 months to September 2026. Savings and money market deposit rates are variable and are assumed unchanged for the year. Taxes are ignored in this and every other illustration.
| Where the cash sits | Rate (%) | Value after one year ($) | Value in today's dollars ($) | Change in purchasing power ($) |
|---|---|---|---|---|
| National average savings | 0.38 | 10,038 | 9,680 | -320 |
| National average money market deposit account | 0.63 | 10,063 | 9,704 | -296 |
| National average 12-month CD | 1.76 | 10,176 | 9,813 | -187 |
| 52-week Treasury bill | 4.32 | 10,432 | 10,060 | +60 |
Value in today's dollars = value after one year / 1.037.
An illustration of arithmetic, not a projection: individual banks pay rates above and below the national averages, and actual inflation can differ.
Run Your Own Cash Numbers
See how a balance grows at different interest rates and over different time periods.
Open Compound Interest CalculatorAt the national average savings rate, the balance grows to $10,038 but is worth $9,680 in today's dollars, a loss of $320 in purchasing power. At the 52-week bill rate, it grows to $10,432 and is worth $10,060 in today's dollars. Three of the four rows lose ground to 3.7% inflation; one gains a little.
How Each Cash Vehicle Works and What Protects It
The rate is only half of the comparison. The other half is what stands behind the principal and how quickly the money can be reached. On both counts, the four main cash vehicles differ in kind, not only in degree.
| Vehicle | How the rate is set | What protects the principal | Access to the money |
|---|---|---|---|
| Savings and money market deposit accounts | Set by the bank; variable and can change at any time | FDIC insurance up to $250,000 per depositor, per insured bank, for each account ownership category | Generally on demand |
| Certificates of deposit (CDs) | Fixed rate for a fixed term | FDIC insurance within the same limits | At maturity; early withdrawal usually triggers a penalty |
| Treasury bills | Set at auction; sold at a discount and mature at face value | Backed by the full faith and credit of the US government | Maturities from 4 to 52 weeks; can be sold before maturity at the market price |
| Money market funds | Yield moves with the short-term debt the fund owns, such as Treasury bills and repurchase agreements, net of fund expenses | Not bank deposits and not FDIC insured; many seek a stable $1.00 share price but can lose money; SIPC covers a broker's failure, not investment losses | Generally redeemable on business days |
Bank Deposits and CDs
Savings accounts and money market deposit accounts are bank deposits. The bank sets the rate and can change it at any time. FDIC insurance covers up to $250,000 per depositor, per insured bank, for each account ownership category.
A certificate of deposit (CD) fixes the rate for a fixed term and is FDIC insured within the same limits. Taking the money out before the term ends usually triggers an early withdrawal penalty.
Treasury Bills
Treasury bills are short-term US government debt, backed by the full faith and credit of the US government. They are sold at a discount and mature at face value, with maturities from 4 to 52 weeks. A bill can be sold before maturity at the market price, which may be above or below the original purchase price.
Money Market Funds
A money market fund is a mutual fund that invests in short-term debt such as Treasury bills and repurchase agreements. It is not a bank deposit and is not FDIC insured. Many money market funds seek to keep a stable $1.00 share price, but they can lose money.
The similar names cause confusion. A money market deposit account is a bank deposit covered by FDIC insurance, while a money market fund is an investment product. When a fund sits in a brokerage account, coverage from the Securities Investor Protection Corporation (SIPC) protects against the broker's failure, not against investment losses.
Money Market Fund Assets, 2021-2026
| End of period | Total money market fund assets ($ trillion) |
|---|---|
| 2021, Q4 | 5.21 |
| 2023, Q4 | 6.36 |
| 2025, Q4 | 8.19 |
| 2026, Q2 | 8.44 |
| Change, end of 2021 to end of Q2 2026 (%) | +62 |
Total money market fund assets rose from $5.21 trillion at the end of 2021 to $8.44 trillion at the end of the second quarter of 2026, a 62% increase.
The Opportunity Cost of Cash, in Both Directions
Opportunity cost is the return given up on the alternative not chosen. For cash, the alternative is usually stocks or bonds, and the cost can run either way: in some years cash gives up gains, in others it sidesteps losses.
The table uses three funds as measurable stand-ins: the T-bill fund for cash, the S&P 500 fund for US stocks, and the iShares Core U.S. Aggregate Bond ETF (AGG) for bonds.
| Period | T-bill fund (BIL) (%) | S&P 500 fund (SPY) (%) | Bond fund (AGG) (%) |
|---|---|---|---|
| 2022 | +1.40 | -18.18 | -13.02 |
| 2023 | +4.94 | +26.18 | +5.66 |
| 2024 | +5.19 | +24.89 | +1.31 |
| 2025 | +4.15 | +17.72 | +7.19 |
| 2026 to Nov 6 | +2.75 | +8.67 | -0.36 |
When Cash Avoided Losses: 2022
In 2022 the T-bill fund returned +1.40% while the S&P 500 fund returned -18.18% and the bond fund -13.02%. Cash still lost to 6.45% inflation that year. In nominal terms, though, it lost far less than either alternative.
When Cash Gave Up Gains: 2023-2025
The next three years ran the other way. The S&P 500 fund returned +26.18%, +24.89% and +17.72%, while the T-bill fund returned +4.94%, +5.19% and +4.15%. In 2026 to November 6, the S&P 500 fund was up 8.67%, the T-bill fund 2.75%, and the bond fund was down 0.36%.
Past performance does not guarantee future results. These rows describe what happened, not what comes next.
Inflation Risk and Reinvestment Risk
Cash carries no price risk in the way stocks and bonds do: a bank deposit, or a Treasury bill kept to maturity, does not swing with the market. It carries two other risks instead.
- Inflation risk is the chance that prices rise faster than the cash earns. For the T-bill fund, that happened in every calendar year from 2010 through 2022.
- Reinvestment risk is the chance that income falls when short-term rates fall, because maturing bills and variable deposit rates reset lower. The 3-month yield averaged 2.11% in 2019, 0.36% in 2020 and 0.04% in 2021.
Stocks and Cash Mixes, 2016-2025
A single year of opportunity cost says little about a decade. The table follows five hypothetical portfolios built from the S&P 500 fund and the T-bill fund, rebalanced to the target mix at the end of each calendar year. Returns are total returns with dividends reinvested, with no costs beyond fund expenses.
| Mix: S&P 500 fund / T-bill fund | Annualized return (%) | Value of $10,000 end of 2025 ($) | Value in 2015 dollars ($) | Worst year (%) |
|---|---|---|---|---|
| 100/0 | 14.72 | 39,466 | 28,806 | -18.18 (2022) |
| 80/20 | 12.35 | 32,040 | 23,386 | -14.26 (2022) |
| 60/40 | 9.90 | 25,696 | 18,756 | -10.35 (2022) |
| 40/60 | 7.36 | 20,346 | 14,851 | -6.43 (2022) |
| 0/100 | 2.04 | 12,236 | 8,931 | -0.10 (2021) |
Over this decade, every additional slice of cash lowered both the ending value and the worst-year loss. The all-stock mix ended at $39,466 with a worst year of -18.18% in 2022. The all-cash mix ended at $12,236 with a worst year of -0.10% in 2021.
CPI rose 37.01% from December 2015 to December 2025. In end-2015 dollars, the all-cash mix ended at $8,931, below its starting purchasing power of $10,000.
The trade-off sits plainly in the columns. Higher stock weights came with higher ending values and deeper single-year declines; higher cash weights came with shallower declines and lower ending values.
The window matters. It includes seven years of negative real cash returns, 2016 through 2022, and a strong decade for US stocks. Another decade can look very different.
Questions People Use to Frame a Cash Reserve
No single figure fits every household. People who think through a cash reserve often start with questions like these:
- What expenses would the reserve need to cover, and for how long?
- How stable is the household's income?
- When do known large payments, such as tuition or a home repair, fall due?
- How much of a stock market decline could be sat through without selling?
- Is the cash kept on purpose, or by default in a low-rate account?
- Which inflation measure comes closest to the household's own spending?
An emergency reserve and long-term investments usually serve different jobs. The reserve covers known and unexpected spending in the near term, while long-term investments are usually meant to compound over many years, through declines as well as gains. A qualified financial professional can help apply these questions to an individual situation.
Two Ways to Read Cash in 2026
One Way to Read It: Cash Has a Job Again
One way to read cash in 2026 is that it has a job again. The 3-month Treasury yield of 4.19% sits above headline CPI of 3.7%, core CPI of 2.6% and 10-year breakeven inflation of 2.23%. The T-bill fund returned more than inflation in 2023, 2024 and 2025, and money market fund assets reached $8.44 trillion.
Another Way to Read It: The Cushion Is Thin
Another reading is that the cushion is thin and depends on where cash sits. Against headline CPI of 3.7%, the 3-month bill keeps about half a point, while the national average savings rate of 0.38% loses more than three points.
The real return of the T-bill fund averaged only +0.08% a year over 2022-2025. Short-term yields can also fall quickly, as 2020 showed, when the 3-month yield averaged 0.36% after 2.11% in 2019.
Frequently Asked Questions
What is the real yield on cash in 2026?
It depends on the vehicle and the inflation measure. On November 6, 2026 the 3-month Treasury bill yielded 4.19%, about 0.49 point above headline CPI of 3.7%, 1.59 points above core CPI and 1.96 points above 10-year breakeven inflation. The FDIC national average savings rate of 0.38% was about 3.32 points below headline CPI.
Does cash beat inflation in 2026?
Some cash does and some does not. Treasury bill yields of 4.19% for the 3-month bill and 4.32% for the 52-week bill were above headline CPI of 3.7%. The FDIC national averages for savings (0.38%), money market deposit accounts (0.63%) and 12-month CDs (1.76%) were below it.
Are money market funds FDIC insured?
No. Money market funds are mutual funds, not bank deposits, and are not FDIC insured. Many seek a stable $1.00 share price, but they can lose money, and SIPC coverage at a brokerage protects against the broker's failure, not against investment losses.
What is the difference between a money market deposit account and a money market fund?
A money market deposit account is a bank deposit with a variable rate set by the bank, and FDIC insurance covers up to $250,000 per depositor, per insured bank, for each account ownership category. A money market fund is an investment that owns short-term debt. Its yield moves with that debt, net of fund expenses, and it is not FDIC insured.
Why did cash lose purchasing power from 2010 to 2022?
Inflation outran what cash earned. The T-bill fund's real return was negative in every calendar year from 2010 through 2022: -1.32% a year across 2010-2019 and -3.85% a year across 2020-2021. In 2022 it was -4.74%, as 6.45% inflation outran a 1.40% return.