I could give song and verse about why it is a good time to sit in cash based on high valuations in equity markets or Bond prices being low, but my job is about long term financial and tax planning for people who are living in Italy. Therefore, 99% of the time the answer to the question will always be to invest and not sit in cash.
Stay in cash or invest?
By Gareth Horsfall
This article is published on: 19th May 2026
That might sound like a simple and quick reply to the question, but there is really only one instance when we would advise someone living in Italy to stay in cash for any period.
Why should I keep my money in cash?
For anyone who needs cash in the short term — for a renovation of their Italian home, an Italian property purchase, or a major life event, money to support income needs or care costs etc — keeping money in cash is sensible, regardless of interest rates or market returns. Cash is stability, and stability has a value when we have expenses or liabilities, which can be quantified both monetarily and the term over which they need to be paid.
However, for all other long‑term goals — retirement income, future healthcare needs, supporting children or grandchildren — cash is a terrible solution. Over long periods, inflation erodes purchasing power far faster than cash can grow and if you are planning for life in Italy it is no different to anywhere else.
Even when interest rates appear attractive (and sometimes cash rates are better than that offered by the markets, but for very brief periods) they rarely keep pace with rising prices over a decade or more. Markets fluctuate, but over time, they have consistently outperformed cash.
Cash returns often fail to keep up with inflation!
The same principle applies today that we have always applied for our clients. Cash has a role, especially for short term needs.
But for long term goals, investing remains the most reliable way to preserve and grow purchasing power.
Inflation never disappears — and cash alone cannot protect you from its long term effects.
Italian life can be much cheaper, in many ways (food, access to services [beaches, countryside, cultural venues], eating out at restaurants etc) than life in other countries, but it still does not negate the need to invest for your long-term future rather than leaving your money sat in cash.
(At time of writing you can expect to get back, on average, a 2% return from your cash in EU based deposit accounts. If you lock in for any specific term, you may be able to get some higher rates but then you lose the liquidity of your funds)