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Why Should You Learn How to Invest? — Reason 2: Beat Inflation
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Reason 2: Beat Inflation

Reason 2: Beat Inflation

If history is any proof, investing does a much better job when it comes to creating wealth compared to a savings account.

In fact, if you put your money in a savings account or under your mattress, you may even be losing money because of inflation.

What’s inflation, you may ask? Inflation is the increase in the prices of products and services over time. The purchasing power of our money declines year after year. If you let your money sit in your pocket or even in a bank account, you’ll lose to inflation. That’s because the cost of living grows but the value of your money doesn’t.

Sure, you may be receiving interest from your savings in your bank account. Yet the amount is usually so small that when adjusted for inflation, your return may still be negative. Take for example: over the last 50 years, inflation in the US averaged 4.05% a year while the stock market saw an average return of 9.81%. This was despite the 2008 market meltdown. Compare that to the interest rate you’re receiving from your bank.

“How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case.”  — Robert G. Allen