Is holding too much cash a mistake? Here's why that may lead to regrets, experts say

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It wasn't long ago that investors earned practically 0% returns on cash. As the Federal Reserve has kept interest rates high to combat high inflation, you can easily earn 5% annual percentage yields on savings accounts and other low-risk vehicles. Some experts are now warning it's possible to get too comfortable with those super-safe returns and miss out on bigger market returns. "We're too obsessed with cash," Callie Cox, chief market strategist at Ritholtz Wealth Management, wrote last week in a blog post. An estimated $6 trillion in cash is parked in money market funds. Industry research finds younger investors — those with the longest time horizon to absorb risk — are allocating the most to cash. More from Personal Finance: Is the U.S. stock market too 'concentrated'? Americans struggle to shake off a 'vibecession' Retirement 'super savers' have the biggest 401(k) balances More than half — 55% — of wealthy younger investors ages 21 to 43 ramped up their cash allocations in the past two years, compared to 46% of individuals ages 44 and up, recent research from Bank of America found. While Bank of America focused on investors with at least $3 million in investable assets, trading and investment platform eToro earlier this year found younger investors are twice as likely as their parent's generation to have increased their cash assets. The eToro survey polled 1,000 U.S. retail investors as part of a bigger pool of 10,000 in 13 countries, and respondents held at least one investment product. "The bigger issue that not enough people are talking about is the fact that younger investors are over-allocating the cash because of the allure of the 5% savings rate," Cox said in an interview with CNBC.com. "Under-investing is a risk, and it's one that I think more younger investors are susceptible to," Cox said.