For many people who relocate to Spain, cash becomes the default position. When there are so many moving parts, “I’ll decide later” feels sensible, and in the short term, it often is. The issue is not holding cash, but holding too much of it for too long.
Cash Is Comfortable. But Is It Quietly Costing You?
By Jett Parker-Holland
This article is published on: 16th February 2026
What tends to go unnoticed is that cash rarely keeps pace with inflation. Even when deposit rates look appealing, inflation and tax steadily reduce the real value of your money. In Spain, interest on bank deposits is taxed as savings income, at rates of up to 30 percent. Once tax is deducted and inflation is accounted for, the true return can be negligible or even negative. Five or ten years later, the same capital simply buys less. This is the silent cost of excessive caution and is particularly relevant for expatriates.
Many of the people I work with have built capital through years of disciplined saving in the UK. They may have sold a home or business, drawn a pension lump sum, or received an inheritance. The proceeds arrive in Spain and sit in a current account while life settles.
Recently, I spoke with a couple in their late fifties who had relocated to Andalucía following the sale of their UK property. After setting aside a sensible emergency reserve, they had roughly €500,000 in cash. For the first year it remained in a Spanish bank account earning modest interest. A 2% interest rate before tax wasn’t beating the 2.7% inflation we saw in 2025. When we reviewed their position, the conversation was not about chasing high returns, but creating stability, flexibility, and the reassurance that their capital would support their lifestyle and pass, in time, efficiently to their family.
We kept an appropriate cash reserve in place. The remainder was structured into a Spanish-compliant investment designed to grow steadily ahead of inflation, without triggering annual tax on internal growth.
When we modelled the expected outcomes, the difference over time was meaningful. More importantly, they felt confident that their money was finally aligned with their new life in Spain.
This is one of the most common conversations I have. Cash feels safe because it is seen as risk-free, but real safety is about making sure that your money is working for you over the long term. If you have significant savings sitting in a bank account and you are unsure whether they are working as effectively as they could be, it may be time to take a fresh look. If you have cash sitting idle and want to understand what it could be doing instead, get in touch and let’s talk through a plan that supports your aspirations in Spain.