What is inflation and how it eats your life savings?
28th March, 2019
#inflation and economy# earn money inflation# inflation lost money
As you already know assets or investments appreciate or go up in value. However, a bad asset or non-investment things you buy usually and most times go down in value. This is called inflation when the price of things go up and you can buy less things with the amount you earn. Inflation is a good thing if you are positioned correctly in the market. As you can make money when inflation happens if you have the right assets that are bound to go up in value or price. However, inflation usually is a set rate at around 2-4% in First World Countries. In some countries this could go up as high as 20-30%. That kind of inflation is really bad because very few people can become rich in those countries. However, inflation is necessary for a market or an economy to grow. A healthy rate of inflation is 2-4% depending on the currency and situation of the country. So if you have your life saving in cash, you are basically losing some of that money on a daily basis. This is why you should try to find a safe place or a place that at least your money gets 2-4% interest in a year or otherwise you are losing on the capital that you have worked hard to save. On the other hand, if an asset or an investment pays you more than inflation rate usually it involves risk. So you have to be very careful when you are trying to store your money somewhere. First you have to make sure it doesn’t get stolen. Then you have to make sure it preserves its value.