Inflation — The Silent Tax on Your Savings
Inflation means prices rise over time and your money buys less. At 3% inflation, $100 today buys only $74 worth of goods in 10 years.
The Erosion of Purchasing Power
| Years | $100,000 at 3% Inflation | Real Purchasing Power |
|---|---|---|
| 5 | Still $100,000 | Buys $86,261 worth |
| 10 | Still $100,000 | Buys $74,409 worth |
| 20 | Still $100,000 | Buys $55,368 worth |
| 30 | Still $100,000 | Buys $41,199 worth |
Cash in a 0% savings account loses 3% of purchasing power every year. In 30 years, you lose nearly 60% of value.
How to Beat Inflation
Invest in assets that grow faster than inflation: stocks (10% avg), real estate (4-7%), bonds (3-5%). Even a high-yield savings at 4-5% barely keeps up. Long-term wealth requires equity investments.