All articles · 2026-06-24 · Investing
Why cash in a savings account makes you poorer every year
Cash in a savings account feels safe, but loses purchasing power annually due to inflation. Discover how a layered approach can make your company cash work for you again.
By Jan Hermans, CEO & founder of Lyff.
In some months, Belgian inflation stood at about 4%. A traditional savings account, meanwhile, yields about 1.5%. The difference seems small on paper, but it is precisely this difference that ensures you are subtly getting poorer, year after year. Those who work through a management company (managementvennootschap) and see a solid buffer in their current account after a few good years probably recognize this problem all too well: that money feels safe, but it is economically stagnant while its purchasing power erodes.
The alternative is not complicated: invest instead of parking. You grow with companies that generate profit year after year, and your portfolio grows with them. But how do you concretely approach this within a management company (managementvennootschap), and when is it wise or unwise to leave cash untouched? We explain this in this blog.
Parking cash means losing purchasing power
Many management companies (managementvennootschappen) build up a comfortable buffer after a few years. Operations are running, fixed costs are predictable, and taxes are under control. What remains is often simply parked in a savings account. That feels safe, but cash in a savings account yields little today, while inflation is doing its work. Parking cash effectively means incurring a loss of purchasing power.
Take a concrete example: a physiotherapist works through his management company (managementvennootschap) and after a few good years, sees almost € 300,000 in his savings account. He considers that his safety net. When he reviews the figures with his advisor, it turns out that his operational and fiscal buffer is actually only around € 75,000. The rest is stagnant, without a concrete function, and is steadily losing value in the meantime.
Not every euro has to do the same job
The solution is not to invest everything or leave everything in the savings account, but to take a layered view of cash. Not every euro in your company needs to play the same role:
- Short term: liquidity you need as a buffer for operations, taxes, and unforeseen events. This layer ensures your company functions and is best kept liquid.
- Medium term: money that needs to remain available, but doesn't have to be stagnant. You can use this to protect your purchasing power without losing flexibility.
- Long term: the domain of pensions, real estate, and investment strategies where time is precisely your ally.
By dividing cash into layers, as in the example above, one can keep a first part fully liquid as a buffer, give a second part a medium-term destination that protects purchasing power, and link a third part to a long-term goal such as pension accumulation or a future investment. The same peace of mind, but the money is moving again.
What if you don't dare to invest yet?
A persistent misconception is that investing is always risky. In reality, you can mitigate much risk through the chosen horizon, the degree of diversification, and the discipline with which you execute your investment plan. Time acts as a buffer here. Investing is unsuitable for money you need quickly, but can be meaningful for cash that temporarily has no destination.
Fiscally (fiscaal gezien), a different framework applies within the company than with private investing: realized capital gains (meerwaarden) are in principle taxable, but realized capital losses (minwaarden) are tax-deductible (fiscaal aftrekbaar). Your company thus not only benefits when an investment performs well, but also absorbs part of the risk when it underperforms.
Those who want to start would do well not to wait for the perfect entry point. Investing with regular frequency lowers timing risk, dampens the effect of market fluctuations, and makes decisions less emotional. The goal is not to outsmart the market, but to choose an approach you can stick to.
Conclusion
Cash sitting idle in a savings account feels safe, but is steadily losing value due to inflation. By dividing your cash into layers—buffer, medium term, and long term—and consciously putting the surplus to work in the market, you make your company work for you again instead of standing still.
Do you want to know how much of your company cash is actually a true buffer, and how much is quietly losing purchasing power? Feel free to contact Lyff. for a tailored cash plan.
Frequently asked questions
Why does cash in a savings account lose value?
Because the interest rate on a traditional savings account is generally lower than inflation. For example, if inflation is 4% and the savings rate is 1.5%, the effective purchasing power of that money decreases every year, even if the nominal amount remains the same.
How much cash should I keep as a buffer in my company?
This varies per case and depends on your operating costs, tax obligations, and unforeseen expenses. In practice, the actual buffer often turns out to be much smaller than the amount entrepreneurs leave in the account out of caution.
Is investing through the company risky?
Investing always carries a certain risk, but that risk can be greatly limited by the chosen time horizon, sufficient diversification, and discipline in the investment plan. Moreover, realized capital losses (minwaarden) within the company are tax-deductible (fiscaal aftrekbaar), which mitigates part of the risk.