Have you noticed your grocery bill creeping up? That's inflation. It's the rate at which the purchasing power of your currency is falling.
Check Your Purchasing Power
See what $100 in 1990 is worth today.
The "Rule of 72" for Inflation
A quick trick to see how fast your money loses value is the Rule of 72. Divide 72 by the inflation rate.
Example: If inflation is 3%, (72 ÷ 3 = 24). It will take 24 years for prices to double. If inflation jumps to 9%, prices double in just 8 years!
Why Cash is Trash (Long Term)
If you keep all your savings in a shoebox or a 0% interest checking account, you are effectively losing money every year. To beat inflation, your money must grow at a rate higher than inflation.
How to Protect Yourself
- Invest in Assets: Stocks (S&P 500) and Real Estate historically outpace inflation over long periods.
- Ask for a Raise: If your salary didn't go up by at least the inflation rate this year, you technically took a pay cut.
- TIPS (Treasury Inflation-Protected Securities): These are government bonds specifically designed to adjust with inflation.