Why Your Brain Overvalues Cash and Undervalues Assets

In this episode of The Money Mindset Podcast, Lucas and Luna explore the cognitive bias known as 'cash illusion' or 'money illusion'--the tendency to think of cash as inherently safer and more stable than it really is, while ignoring the corrosive effect of inflation. Using the specific example of a $50,000 inheritance left untouched in a bank account from 2010 to 2025, they show how that cash lost over 30% of its purchasing power. They contrast this with a hypothetical investment in a simple S&P 500 index fund, which would have grown to over $175,000 in the same period. The hosts discuss why our brains treat physical cash as 'real' and financial assets as 'fake,' and offer practical mental reframes to overcome this bias, including thinking in terms of purchasing power, not nominal dollars. They also touch on the role of financial advisors in helping clients avoid this trap. #CashIllusion #MoneyIllusion #Inflation #PurchasingPower #BehavioralFinance #Investing #IndexFunds #S&P500 #FinancialPsychology #WealthMindset #Inheritance #AssetAllocation #FinancialAdvisor #CognitiveBias #PersonalFinance #Finance #FexingoBusiness #BusinessPodcast Keep every episode free: buymeacoffee.com/fexingo