What is cash drag and how does it hurt my returns?

Cash drag is the lost growth from leaving money uninvested when it should be working in the market. If you contribute to your IRA but forget to actually buy funds — a surprisingly common mistake — that cash earns next to nothing while stocks compound, and over years the gap is large. Even modest amounts add up: $10,000 idle instead of invested could cost tens of thousands over a few decades at historical equity returns. The fix is to make sure every dollar you intend to invest is actually allocated, not just deposited. Two checks: confirm contributions are invested, not parked in a settlement fund, and avoid holding large "waiting for the right moment" cash piles in your investment accounts. Cash is for your emergency fund and near-term spending — not for money earmarked for long-term growth. Automate purchases so contributions invest themselves immediately.