Blackrock CEO Larry Fink calls keeping your money in a bank 'one of the worst financial decisions of a lifetime.' What to do instead

Fink argued that too many people are leaving their savings sitting idle in bank accounts instead of using them to buy assets that can appreciate in value. The BlackRock CEO also said that widespread participation in investing is becoming more important, arguing that wages alone will not be able to keep pace with wealth created by capital.

“We are not going to be able to broaden economic success only by wages because wages in this AI world are not going to grow as fast as the potential of the AI growth and the capital that is going to be invested,” Fink said.

Reliance on banks

Keeping your money in the bank has long been considered one of the safest ways to protect your cash. Bank accounts can provide easy access to money and, depending on the institution, can protect your money even if the bank fails.

Cash is also vital for emergency savings and short-term expenses. Having money readily available in a bank account means you can access it when needed and feel confident that it’s protected.

However, while cash can preserve purchasing power in the short-term, it generally has less potential for growth compared to investments such as stocks, bonds and other assets. This is especially true when accounting for the impact of inflation. Even if a savings account earns interest, the purchasing power of that money can decline over time if the account’s returns don’t keep pace with inflation.

What to do instead

Fink has long encouraged everyday investors to think beyond traditional savings accounts, arguing that more people should have the opportunity to participate in economic growth.

There are many ways investors can do this.

Possibly the most obvious way is by investing in the stock market. The S&P 500 is trading near record highs. According to the latest update from FactSet, the benchmark index is on track to post year-over-year earnings growth of over 50% for the second quarter.