Warren Buffett is sitting on a record amount of cash — here's why you may not want to follow suit

Warren Buffett is well known for his investing talent, as the billionaire got very rich through buying undervalued stocks and holding them for the long term.

It may come as a surprise, however, to learn that Berkshire Hathaway — the multinational conglomerate he runs — held a record $334 billion in cash at the end of last year after selling $134 billion in stocks in 2024, including notable stakes in both Apple and Bank of America, according to CNBC. As of March 31, that amount has increased to $347 billion.

Buffett amassing a big pile of cash may seem like a smart move in light of the market’s recent performance. After all, throughout history, only former Presidents Richard Nixon and Gerald Ford saw the stock market perform worse during their first 100 days in office than Donald Trump in 2025.

However, while Buffett has so far managed to limit his exposure to recent market volatility, it’s typically not in the best interest of the average investor. Here’s why.

Although Buffett kept billions safe from potential loss this year, the Oracle of Omaha made clear that he doesn’t believe cash is king.

“Berkshire will never prefer ownership of cash-equivalent assets over the ownership of good businesses, whether controlled or only partially owned,” he wrote in his 2024 letter to shareholders.

The problem with cash is that your potential return on investment is very limited. Even if you put money into a high-yield savings account or certificate of deposit, it’s unlikely you’ll earn more than 5% annual interest, and it’ll probably be much less. Given that the S&P 500 has consistently produced average annual returns above 10% in its history — despite the volatile nature of the stock market — choosing cash investments cuts your growth potential.

Let’s not forget inflation can siphon the buying power of cash and lower the value of any returns. So, while putting money into cash can make investors feel safer during turbulent times, you might also end up losing ground if inflation is high.

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